How position size is calculated
Position size is the function of three numbers: how much money you have, how much of it you are willing to lose on this trade, and how far away your stop loss sits from entry.
Position Size (lots) = Risk Amount / (Stop Loss in Pips * Pip Value per Lot) Where: Risk Amount = Account Balance * Risk % Pip Value/Lot = ~$10 USD for most majors (1 standard lot = 100k units)
Risk per trade is typically capped at 1-2% of the account. A trader with $10,000 risking 1% on a 50-pip stop on EUR/USD would size at $100 / (50 × $10) = 0.20 lots — that is, 20,000 units of EUR.
This calculator does not account for spread, swap, or commission costs, which would narrow actual profit and slightly increase effective risk. Pair it with the Risk-Reward Calculator for trade viability checks.