Position sizing is how you decide exactly how big each trade should be so that a single loss only costs what you planned to risk. Use the free lot size calculator below, then read the full guide covering what a lot is, the formula, the 1% rule, and how to size forex, gold, oil and indices.
A lot is the unit of quantity you trade. In forex, one standard lot is 100,000 units of the base currency, a mini lot is 10,000 units (0.1 lots) and a micro lot is 1,000 units (0.01 lots). The bigger the lot, the more each pip of movement is worth, and the more money is on the line.
Position sizing is the process of choosing a lot size so that, if your stop loss is hit, you lose only the amount you decided to risk in advance, no more. It is the single most important risk-management habit a trader can build. Get it right and a losing streak is survivable; get it wrong and one bad trade can do outsized damage to your account.
This calculator works out lot size from a simple relationship:
Lot size = Risk amount ÷ (Stop loss in pips × Pip value per lot)
For example, on a $10,000 account risking 1% ($100) with a 20-pip stop on EUR/USD, where one pip is worth about $10 per standard lot: 100 ÷ (20 × 10) = 0.5 lots. The calculator handles the pip-value differences between forex, metals, energy and indices for you, but you should always confirm contract specs against your own broker.
Most professionals risk 1% or less of their account per trade. Smaller, consistent risk keeps you in the game through the inevitable losing runs. If the required margin for your position is larger than your balance, the calculator will warn you. That's a sign to reduce size or use lower leverage.
This page is the hub for everything on sizing your trades. Each guide below goes deeper on one part of position sizing. Start with the step-by-step walkthrough, then work through the rest.
More in this series coming soon: the 1% risk rule explained, pip value & how to calculate it, position sizing for gold (XAU/USD), and stop-loss placement and size.