How to Calculate Position Size, with a Calculator
Position size is the number that decides what a losing trade costs you. You do not choose it by feel. You work it out from three inputs: your account, the share of it you accept losing on this trade, and the distance to your stop. This guide shows how to calculate position size step by step, with worked examples for a forex pair, a yen pair, gold, a stock and a crypto pair, and what to record so the habit holds.
Spec
- Category
- Risk management
- Reading time
- 12 min read
- Updated
- Sections
- 10
- Language
- English
What is the position size formula?
Every correct method comes down to one division. First decide how much money this trade may lose. Then work out how much one unit of size loses if the price reaches your stop. Divide the first by the second.
Position size = money at risk ÷ (stop distance × value of that distance on one unit of size).
- Money at risk
- What you accept losing if the stop is hit: your account balance times your risk per trade. 1% of $10,000 is $100.
- Stop distance
- The distance from your entry to your stop, in the market's own unit: pips for forex, dollars for gold, stocks and crypto.
- Value per unit
- What that distance is worth on one unit of size: one lot, one share, one coin. In forex this is the pip value.
- R
- The money at risk on one trade, used as a unit. A trade that hits its stop loses 1R; a trade that makes twice the risk wins 2R.
Choose your risk per trade and turn it into money.
Place the stop where your idea is wrong, and measure the distance from the entry.
Find what that distance costs on one unit of size in this market.
Divide the money at risk by the cost per unit, and round down to a size your broker accepts.
- 05
Check the total: size times cost per unit, plus spread and commission, must not exceed the money at risk.
How do you use the position size calculator?
Enter your balance, your risk per trade, the entry and the stop. The calculator reads the direction from where the stop sits, works out the money at risk and the stop distance, and divides one by the other. Add a contract size to see the size in lots, a fee per side to see the real loss at the stop, and leverage to see how the margin shrinks, which never changes the risk.
Position size calculator
Fix the money at risk first; the stop distance decides the size. Leverage changes only the margin and the liquidation estimate.
Results
- Direction
- Long
- Money at risk
- 100
- Stop distance
- 0.0025
- Stop distance (%)
- 0.23%
- Size in units
- 40,000
- Size in lots
- 0.4
- Lots, rounded down to 0.01
- 0.4
- Position value
- 43,400
- Margin required
- 43,400
- Round-trip fees
- 0
- Loss at the stop, with fees
- 100
Balance and prices must be in the same currency: for USDJPY, EURGBP or an account in another currency, enter the balance converted into the pair's second currency first (step 3). The figures are examples, not advice. The liquidation price is an estimate with a flat maintenance margin; your exchange's own figure is the one that counts. Fees are a percentage of the position value, per side.
It opens on step 4's EURUSD trade: $10,000, 1%, a 25-pip stop and a 100,000-unit lot, which gives 40,000 units, or 0.40 lot. Change one field at a time and watch which results move: the stop moves the size, leverage moves only the margin and the liquidation estimate.
Step 1: how much should you risk per trade?
Many traders risk between 0.5% and 2% of the account on one trade. That range is a convention, not a rule, and it promises nothing about results. Its purpose is survival: a run of losses is normal in any method, and the risk per trade decides how deep that run cuts.
The table shows what a run of consecutive losses does to an account at each risk level, when each loss is the same percentage of what is left. It is arithmetic, not a forecast.
| Risk per trade | After 5 losses | After 10 losses | After 20 losses |
|---|---|---|---|
| 0.5% | −2.5% | −4.9% | −9.5% |
| 1% | −4.9% | −9.6% | −18.2% |
| 2% | −9.6% | −18.3% | −33.2% |
| 5% | −22.6% | −40.1% | −64.2% |
The way back is longer than the way down. A 10% drawdown needs an 11.1% gain to recover, 20% needs 25%, a third needs 50% and a half needs 100%. Choose a risk per trade you could hold through twenty losses in a row without changing your method.
Step 2: where does the stop go?
The stop comes first and the size second. Place the stop at the price that proves your idea wrong: beyond the swing low for a long, beyond the level that should have held. Then measure the distance from your entry to that price.
Never move the stop to make a larger size fit. If the correct stop is far away, the correct size is small. A stop that is tight only so that the size can be large will be hit by ordinary noise.
Add the spread to the distance when your platform charts the bid price and you buy at the ask, or the other way round. A long position exits at the bid, so a stop set on the chart's bid line closes when the bid gets there, and you paid the spread on entry.
Step 3: what does the distance cost on one unit?
This is the step most guides skip, and where most mistakes are made. The value of a move depends on the market, the contract size your broker uses, and the currency of your account.
| Market | Distance unit | Size unit | Value per distance unit |
|---|---|---|---|
| EURUSD | 1 pip = 0.0001 | 1 lot = 100,000 EUR | $10.00 |
| USDJPY at 150.00 | 1 pip = 0.01 | 1 lot = 100,000 USD | ¥1,000 ≈ $6.67 |
| XAUUSD (gold) | $1.00 | 1 lot = 100 oz (common) | $100.00 |
| A US stock | $1.00 | 1 share | $1.00 |
| BTCUSD (spot) | $1.00 | 1 BTC | $1.00 |
In forex, a pair quoted in US dollars (EURUSD, GBPUSD, AUDUSD) has a fixed pip value of $10 per standard lot. A mini lot is 0.1 and a micro lot is 0.01, so their pip values are $1 and $0.10.
When the dollar is the first currency (USDJPY, USDCAD, USDCHF), the pip value is in the second currency and changes with the price. For USDJPY, one pip on one lot is ¥1,000. Divide by the rate to get dollars: at 150.00, that is $6.67.
Gold, indices and oil are quoted per point or per dollar, and the contract size is set by the broker. 100 ounces per lot is common for gold, but some brokers use 10 or 1. Read the contract size in the symbol specification before the first trade, not after.
Step 4: how do you divide and round?
The five examples below use the same account, $10,000, and the same risk, 1%, which is $100. Only the market and the stop change.
| Market | Entry → stop | Cost per unit at the stop | Size | Actual risk |
|---|---|---|---|---|
| EURUSD | 25 pips | 25 × $10 = $250 per lot | 0.40 lot | $100.00 |
| USDJPY at 150.00 | 30 pips | 30 × $6.67 = $200 per lot | 0.50 lot | $100.00 |
| XAUUSD | 2,400.00 → 2,392.00 | 8 × $100 = $800 per lot | 0.12 lot | $96.00 |
| Stock | $50.00 → $48.50 | $1.50 per share | 66 shares | $99.00 |
| BTCUSD | 60,000 → 58,800 | $1,200 per BTC | 0.083 BTC | $99.60 |
Gold shows why you round down. $100 ÷ $800 is 0.125 lot. With a step of 0.01, rounding up to 0.13 would risk $104, more than you set. Rounding down to 0.12 risks $96.
The stock and the crypto pair show something else: the size is very different from the money at risk. 66 shares at $50 is a $3,300 position, and 0.083 BTC at $60,000 is about $4,980, but each one loses only about $100 if the stop is hit. Size is what you hold. Risk is what you lose at the stop.
Does leverage change the position size?
Leverage does not change your position size or your risk. It changes the margin: how much of your account the broker sets aside to let you hold the position. With 10:1 leverage the $4,980 crypto position needs about $498 of margin, and it still loses about $100 at the stop.
The danger of leverage is that it lets you open a size the formula never gave you. If your size comes from the formula, leverage only decides whether you can open it.
If your account is not in US dollars, convert either the money at risk or the value per unit into the same currency before you divide. With an account in euros, $100 of risk at a EURUSD rate of 1.0800 is about €92.59. Use the rate at the time of the trade.
How do costs, gaps and slippage change it?
The formula assumes the stop fills at its price. Real fills are often worse, so build the costs in rather than hoping.
- Spread: add it to the stop distance, as in step 2.
- Commission: include the round trip in the money at risk. If $100 is your limit and commission is $7, size for $93.
- Slippage: in a fast market a stop fills at the next available price, not at your price.
- Gaps: over a weekend or a news release, the price can open beyond your stop. A gap can cost more than 1R.
What should the journal record?
Position size is a habit, and a habit is only real if you can check it. For every trade, record the numbers you used, before the entry:
- Account balance and risk per trade, as a percentage and as money.
- Entry, stop and the stop distance in the market's unit.
- The size you calculated, and the size you actually opened.
- The result in R, once the trade is closed.
Each week, look for two things: trades where the opened size was larger than the calculated one, and losses larger than 1R. The first is a discipline problem; the second is a cost, gap or stop problem. Both are easy to see in a journal and invisible without one.
Navrya's trade calculator works in the same order as this guide: from your risk percentage and the stop distance to the size, and only then to the margin your leverage needs. Use it to check the hand calculation, and keep the plan's entries, stop and target next to the evidence for the trade, so you read them together in the review.
Which mistakes are the most common?
Six mistakes account for most sizing errors:
- Choosing the size first and placing the stop to fit it.
- Using the EURUSD pip value for every pair, including yen pairs and gold.
- Rounding up to the next lot step.
- Raising the risk after a loss to win it back.
- Treating leverage as if it were risk.
- Forgetting that the contract size for gold and indices differs between brokers.
- Risk-reward ratio and win rateHow the target, the stop and your win rate decide whether a method can pay.
- Revenge tradingWhy size tends to grow after a loss, and the rules that stop it.
- Trading journal templateThe fields that keep risk and size in every record.
- Risk management in tradingThe three decisions before the open, and how Navrya checks each trade against them.
- What an AI trading journal recordsHow Navrya keeps scenarios, probabilities and trade plans together.
- Trading Journal GuideSetting up, logging a trade and reviewing it.
Questions about position size
What percentage of my account should I risk per trade?
Many traders use 0.5% to 2%, and newer traders often start at the low end. It is a convention, not a rule. Choose a level you could hold through twenty losses in a row without changing your method: at 1%, that run costs about 18% of the account; at 5%, about 64%.
Does leverage change my position size?
No. Your size comes from the money at risk and the stop distance. Leverage only changes the margin the broker holds to let you open that size. Higher leverage lets you open a larger position than the formula gives, which is how leverage hurts accounts.
How do I calculate lot size for gold?
Find the contract size in your broker's symbol specification; 100 ounces per lot is common. Then a $1 move is worth $100 per lot. With $100 of risk and an $8 stop, the cost per lot is $800, so the size is 0.125 lot, rounded down to 0.12.
What if the calculated size is smaller than the minimum lot?
Then the trade is too large for your account at that stop. Do not round up to the minimum. Either wait for a setup with a closer, still valid stop, trade a smaller contract such as a micro lot, or skip the trade.
Should I reduce my size after a losing streak?
With a fixed percentage of the current balance, size falls on its own as the account falls. Many traders also halve their risk after a set drawdown until they have reviewed the losing trades. What you should not do is raise the size to win the losses back.