Position size calculator
A position size calculator reverses the usual beginner question. Instead of "how big a trade can I afford?", it asks "how big a trade keeps my loss to an amount I've chosen?". Enter your account balance, the percentage you are willing to risk, the pair, the price and the stop-loss distance in pips.
The formula
Position size (lots) = money at risk ÷ (stop-loss in pips × pip value per lot)
Pip value per lot is $10 on pairs quoted in US dollars; for other pairs it is converted first, as the pip calculator explains.
Worked examples (illustrative figures)
- EUR/USD: balance $5,000, risk 2%, stop 40 pips. Money at risk = $100. Size = 100 ÷ (40 × $10) = 0.25 lots. Check: 0.25 lots is $2.50 per pip, and 40 pips × $2.50 = $100.
- USD/JPY at 150.00: same balance, risk and stop. Pip value per lot ≈ $6.667, so size = 100 ÷ (40 × 6.667) ≈ 0.375 lots. Most platforms would round this down to 0.37.
Reading the result
The number is the largest position that keeps a stopped-out loss near your chosen amount. Round down, not up, to the size your platform allows. Remember that the spread, commission and slippage come on top, so the actual loss can be a little larger than planned, and in a sharp gap it can be much larger.
A wider stop means a smaller position, and a tighter stop a larger one; the money at risk stays the same. That is the main benefit of sizing this way: every trade carries a similar, known risk, rather than one oversized position deciding the month.
Many educational sources use 1% to 2% per trade as an example of a cautious risk level. It is not a rule, and a sequence of losses still adds up: ten losing trades at 2% each would cost around 18% of the starting balance, because each loss is taken from a smaller total. Pair this tool with the margin calculator to check the collateral the trade ties up.