Lesson 9 of 12 · 9 min
Sizing across pairs
The same lot size is a different bet on every pair. Learn to fix the money at risk first and let each pair's pip value and stop distance set the size.
By the end you'll be able to
- Explain why pip value and volatility make the same lot a different bet on each pair
- Calculate lots from money at risk, stop distance and pip value on any major or cross
- Decide when a pair cannot be traded within your risk limit
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You always trade 0.06 lots on EUR/USD. Today you fancy GBP/JPY, so you open 0.06 lots there too, as if it were the same bet. On the numbers in this lesson, that habit doubles your risk without you touching a single setting.
Two reasons the same lot is a different bet
EUR/USDFiber
The deepest, cheapest market in forex: it can drift for days, then move hard on US data or a central-bank surprise.
LiquidityDeepest
The most traded pair in the world
Typical volatilityModerate
Ordinary days often 50–90 pips
Typical spread (shorter bar = cheaper)Tightest
Often under 1 pip in busy hours
Sensitivity to risk moodMild
Tends to dip in risk-off as the dollar is bought
When it moves (UK time)
Most active in the London session (about 07:00–13:00) and the London–New York overlap (about 13:00–17:00), usually the busiest stretch. Illustrative UK times; Asian-session hours shift by about an hour with daylight saving.
Main drivers
USD/JPY
A yield-gap pair that trades in Tokyo hours as well as New York, with sudden lurches when fear or Japan’s authorities step in.
LiquidityVery deep
Usually the second most traded pair
Typical volatilityAbove average
Usually more pips a day than EUR/USD (a yen pip is 0.01)
Typical spread (shorter bar = cheaper)Tight
Usually tight in active hours
Sensitivity to risk moodHigh
Tends to fall in risk-off as the yen is bought
When it moves (UK time)
Most active in Tokyo hours (about 00:00–09:00) and the London–New York overlap (about 13:00–17:00). Illustrative UK times; Asian-session hours shift by about an hour with daylight saving.
Main drivers
EUR/GBP
Two neighbouring economies whose currencies tend to drift together: small daily ranges, so the spread matters more.
LiquidityDeep
Deep in London hours, thin outside them
Typical volatilityQuiet
Often 30–50 pips
Typical spread (shorter bar = cheaper)Moderate
A little wider than EUR/USD, and large next to its range
Sensitivity to risk moodLow
Little direct link: both sides tend to react alike
When it moves (UK time)
Most active in the London session (about 07:00–16:30), busiest in the morning; quiet outside it. Illustrative UK times; Asian-session hours shift by about an hour with daylight saving.
Main drivers
GBP/JPY
The widest-ranging pair here: pound news and yen safe-haven swings combined, so stops need room and positions must be smaller.
LiquidityGood
Good in London hours; thin in late US hours
Typical volatilityVery high
Often 100–200 pips
Typical spread (shorter bar = cheaper)Wider
Wider than GBP/USD or USD/JPY, small next to its range
Sensitivity to risk moodHigh
Falls sharply when fear returns and carry trades unwind
When it moves (UK time)
Most active in stirs in Tokyo hours, then fully alive from the London open (about 07:00) through the overlap to about 17:00. Illustrative UK times; Asian-session hours shift by about an hour with daylight saving.
Main drivers
Switch between a quiet pair and a busy one. Compare the pip value under each card, then the volatility gauge. Typical behaviour, not a forecast; figures are illustrative.
Reason one: a pip is not always $10. Pip value is set by the quote currency, the second one in the pair. One standard lot is always worth 10 units of the quote currency per pip (¥1,000 on a yen pair), converted into your account currency. In a US dollar account that gives roughly:
- $10 on EUR/USD, GBP/USD and AUD/USD, where the dollar is the quote
- $6.67 on USD/JPY and GBP/JPY (¥1,000 ÷ USD/JPY at 150)
- $7.35 on USD/CAD (C$10 ÷ 1.36)
- $12.70 on EUR/GBP (£10 × GBP/USD at 1.27)
Reason two: pairs move different distances. Volatility is how far a pair typically travels. On an ordinary day EUR/GBP often covers 30–50 pips; GBP/JPY often covers 100–200. ATR (average true range) puts a number on it. A stop loss that sits outside the normal noise must therefore be much wider on GBP/JPY than on EUR/GBP.
Both reasons change how much one lot loses when the stop is hit. So the lot size cannot stay the same.
Fix the money, let the size follow
Turn the order round. Decide the money first, then work out the size:
- Money at risk. Your risk per trade, say 1% of the account.
- Stop distance. Where the trade is proven wrong, from the chart or a multiple of ATR. The lesson on stop-loss placement covers how.
- Pip value per lot for this pair, from the list above.
- Lots = money at risk ÷ (stop pips × pip value per lot), rounded down to 0.01.
Rounding down makes your limit a ceiling, never a target. And if even 0.01 lots, the smallest size most brokers accept, risks more than your limit, the answer is to skip the trade. Do not squeeze the stop to make it fit. The position size falls out of the sum; you never pick it first.
The stops below are 1.5 × an illustrative daily ATR: 50 pips on EUR/USD, 150 pips on GBP/JPY.
A stop is not a guaranteed price. In a fast market or over a weekend gap, it can fill beyond your level, so the real loss can be larger than planned.
Try it
Stop rule
| Pairdaily ATR | Stoppips | Pip valueper lot | Sizelots | At risk |
|---|---|---|---|---|
| EUR/USD50 pips | $10.00 | |||
| GBP/USD70 pips | $10.00 | |||
| USD/JPY75 pips | $6.67 | |||
| AUD/USD45 pips | $10.00 | |||
| USD/CAD55 pips | $7.35 | |||
| EUR/GBP35 pips | $12.70 | |||
| GBP/JPY150 pips | $6.67 |
Illustrative daily ATRs. Pip values per standard lot for a US dollar account, at USD/JPY 150, USD/CAD 1.36 and GBP/USD 1.27. Lots rounded down to 0.01, so the money at risk never exceeds your limit.
One $50 budget, seven pairs: each pair's illustrative ATR sets its stop, and its pip value and stop together set its size. Change the balance, the risk or the stop rule.
Notice how GBP/JPY gets 0.03 lots while EUR/GBP gets 0.07, yet both risk under $50. Then set the balance to 1,000: GBP/JPY turns red, because even 0.01 lots on a 225-pip stop would risk $15, more than the $10 limit. GBP/USD only just fails too, at $10.50.
Quick check
Quick check
Question 1 of 4
You have $4,000 and risk 1% ($40). USD/JPY is at 150 and your stop is 80 pips. What size do you trade?
Question 2 of 4
Why is a pip on EUR/GBP worth about $12.70 per lot in a dollar account?
Question 3 of 4
You have $2,000 and trade 0.02 lots of EUR/USD with a 75-pip stop. You copy 0.02 lots to GBP/JPY with a 225-pip stop (USD/JPY at 150). How much is at risk on GBP/JPY?
Question 4 of 4
Your account is $1,000 and you risk 1% ($10). A sensible GBP/JPY stop is 225 pips. What should you do?
Go deeper: Pip value calculator: how to work out pip value for any pair · ATR indicator: average true range for stops and volatility · Position sizing in forex: how to calculate your lot size