Guide · By DueTrack Studio · Updated 2026-10-29
How to calculate position size and lot size in forex
Position size = (account balance × risk per trade %) ÷ (stop-loss distance in pips × pip value per lot). Decide how much of the account you will risk — many traders use 1% or less — measure the stop distance, and the formula tells you the lot size so a stop-out costs exactly that amount.
What is the position size formula?
- Money at risk = account balance × risk %.
- Risk per lot = stop distance in pips × pip value for one lot.
- Lot size = money at risk ÷ risk per lot.
What does a worked example look like?
Account 5,000, risk 1% = 50. Stop 25 pips on a pair where one standard lot is worth 10 per pip: risk per lot = 250. Lot size = 50 ÷ 250 = 0.20 lots.
Is gold calculated the same way?
The method is the same, but contract size and pip (point) value differ between brokers for XAUUSD. Always use your broker's contract specification for the pip value.
Why fixed-percentage risk matters
Risking the same percentage on every trade keeps one loss from becoming a disaster and makes results comparable in R.
Questions
How much should I risk per trade?
Many traders risk 1% or less of their account per trade. Choose an amount you can lose many times in a row without changing your plan.
Why does my lot size come out different from my friend's?
Different account size, stop distance or broker contract size. The formula is the same; the inputs differ.