Position sizing

Decide how much you are willing to lose, then calculate the size. This lesson is the calculation.

Risk first, size second

Risk per trade:

After 10 losses in a row

Gain needed to get back to the start

For comparison: at 1% you keep 90%, at 5% you keep 60%, at 10% you keep 35%.

Each bar is the account after one more losing trade. Move the slider to change how much is risked on each trade.

Risk per trade is the amount you lose if your stop loss is hit. A widely used guideline is 1 to 2% of the account. The ladder above shows why: at 1%, ten straight losses leave you with 90% of your money and a small hole to climb out of. At 10%, the same streak leaves 35%, and you need to nearly triple the account just to get back to where you started.

Losing streaks happen to everyone. Small risk per trade is what makes them survivable.

The formula

Once you know the risk in money and where your stop goes, the position size follows:

Position size (lots) = Money at risk ÷ (Stop loss in pips × Pip value per lot)

Try it

Account balance ($)Risk per trade (%)Stop loss (pips)Pip value per standard lot ($)

Notice how doubling the stop loss halves the position size, while the money at risk never changes.

Quick check

1. Question 1 of 3

   Account $2,000, risk 1%, stop 20 pips on EUR/USD. What position size?

   A0.10 lotsB1.00 lotC0.01 lots

Go deeper: Stop losses: where to place them · The habits that separate traders who last · Position sizing in forex: how to calculate your lot size