JoymistaWhat Is Position Sizing and How Do You Calculate It?
Position size comes from the amount you accept to lose: size in lots = risk amount ÷ (stop distance in pips × pip value per lot).
Explained
This keeps your loss at the stop the same however far the stop is: a wide stop means a smaller size, a tight stop a larger one. Many traders risk a small share of the balance on each trade.
Example
Example with made-up numbersA 10,000-dollar balance risking 1%, or 100 dollars, a 50-pip stop and a pip value of 10 dollars per lot give 100 ÷ (50 × 10) = 0.2 lots.
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Open in JoymistaEducational content, not investment advice.