Forex Position Sizing: How to Calculate Your Lot Size

Short answer: Position sizing picks the lot size so a losing trade costs an amount you set in advance. Lots = money at risk ÷ (stop loss in pips × pip value per lot). On a $5,000 account risking 1% ($50) with a 25-pip stop on EUR/USD, the size is 0.2 lot.

Position size for $50 at risk and a 25-pip stop, pip value about $10 per lot. Illustration, October 2026.

The formula in three steps

1. Decide the money at risk. For example 1% of a $5,000 account is $50.
2. Measure the stop distance in pips. Place the stop where your trade idea is wrong, then count the pips from your entry. See what a stop loss is.
3. Divide. Lots = money at risk ÷ (pips × pip value per lot).

For EUR/USD on a US dollar account, one pip on one standard lot is about $10 (see pip value by lot size). Other pairs and account currencies differ, so check the pip calculator.

Worked example

Account: $5,000. Risk: 1%, so $50. Trade: buy EUR/USD with a stop 25 pips away.

• Pip value per standard lot: about $10.
• Loss per lot at the stop: 25 × $10 = $250.
• Lots: $50 ÷ $250 = 0.2 lot.

Check: 0.2 lot is about $2 per pip, and 25 pips × $2 = $50.

Same risk, different stops

The money at risk stays at $50. Only the stop distance changes the size.

Stop distance	Loss per 1 lot	Position size
10 pips	$100	0.5 lot
20 pips	$200	0.25 lot
25 pips	$250	0.2 lot
50 pips	$500	0.1 lot
100 pips	$1,000	0.05 lot

A wide stop means a smaller position, not a bigger risk. If the lot size you want does not fit the stop, change the lot size.

Where the risk percentage comes from

There is no rule that fixes the right percentage. Many beginner guides use 1% to 2% so that a string of losses does not empty the account. The table shows why: at 1% risk, ten losing trades in a row leave you with about 90% of the account. At 10% risk per trade, ten losses leave about 35%.

Risk per trade	After 10 losses in a row (approx.)
1%	90% of the account
2%	82% of the account
5%	60% of the account
10%	35% of the account

These are compounded: 0.99 to the power of 10 is about 0.904, and 0.90 to the power of 10 is about 0.349. Choose a figure you could live with, using only money you can afford to lose.

Spread, commission and slippage

The formula sizes the loss at the stop price. In practice the loss is a little larger. You pay the spread on entry, you may pay a commission on some account types, and a stop can fill worse than its level (see slippage). Leave a small buffer if the numbers are tight.

Position size and leverage are different things

Leverage decides how much margin a trade locks, not how much you should trade. The same 0.2 lot needs about $217 of margin at 500:1 and about $1,085 at 100:1 on EUR/USD at 1.0850, and it risks $50 at a 25-pip stop either way. More on this in what margin is.

Lot size steps and minimums

Brokers set a minimum lot size and a step. If your calculated size is 0.037 lot and the step is 0.01, round down to 0.03. Rounding up raises your risk above the plan. Micro and cent accounts help small balances, but the terms vary by broker, so read your account’s contract specifications. For lot units see what a lot is, and use the lot size calculator to check your result.

Several trades at once

Open positions on pairs that share a currency, such as EUR/USD and GBP/USD, can lose together when the dollar moves. Count them as one larger risk, or lower the size of each. Risk plans are covered in forex risk management.

Bottom line

Fix the money at risk first, set the stop where your idea fails, then divide to get the lot size. Round down, leave room for spread and slippage, and treat correlated trades as one risk. Only trade with money you can afford to lose. CFDs are complex, high-risk instruments.