Professional Position Sizing

Your position size determines how much you gain or lose from a trade. Getting it right is essential.

The Formula

Position Size = (Account Balance × Risk %) / (Stop Loss in Pips × Pip Value)

Step-by-Step Example

Account: $10,000 | Risk: 1% ($100) | Stop Loss: 20 pips | Pip Value: $10 (standard lot)

$100 / (20 × $10) = 0.5 mini lots

For Forex

Standard Lot = 100,000 units ($10/pip for USD pairs) Mini Lot = 10,000 units ($1/pip) Micro Lot = 1,000 units ($0.10/pip)

Common Mistakes

Risking the same dollar amount on every pair — Pip values vary by pair. Adjust accordingly. Not adjusting for account currency — If your account is in EUR and you trade USD pairs, account for the exchange rate. Increasing size after wins (gambler's fallacy) — Each trade is independent. Don't increase risk just because you're winning.

Pro Tip

Most brokers have position size calculators built in. Use them. But understanding the math ensures you never make a sizing error.

Trade the same risk % on every trade. Consistency in position sizing is what separates professionals from gamblers.