To calculate position size, divide the amount you are willing to lose by the loss on one unit if your stop is hit: Position size = Risk amount ÷ (Stop distance × Value per point per unit). For example, risking $1,000 with a 25-pip stop on EUR/USD, where one pip on one lot is worth $10, gives 1,000 ÷ (25 × 10) = 4 lots.
The order of the steps is the whole point. You choose your risk first, place your stop where the trade idea is wrong, and only then let the formula tell you how big the trade can be. Size follows the stop.
Below is the method step by step, with worked examples for EUR/USD, gold and bitcoin on a $100,000 account risking 1% per trade. All prices are illustrative.
The position size formula
Position size = Risk amount ÷ (Stop distance × Value per point per unit)
Each part has a precise meaning:
- Risk amount: the money you accept losing if the stop is hit, usually a percentage of the account. 1% of $100,000 is $1,000. See how to measure risk.
- Stop distance: the gap between your entry and your stop, in price terms: pips for forex, dollars for gold and crypto.
- Value per point per unit: what a one-point move is worth on one unit of size, meaning one lot or one coin. On EUR/USD it is $10 per pip per standard lot. On gold with 100 oz per lot it is $100 per $1 move per lot. On BTC sized in coins it is $1 per $1 move per coin.
The bottom of the fraction is the loss on one unit if the stop is hit. Dividing your risk amount by it tells you how many units you can hold.
Step by step
- Choose your risk per trade as a percentage of the account.
- Convert it to money: account balance × risk %.
- Find your stop on the chart, at the level where the trade idea is proven wrong.
- Measure the stop distance from your entry, including the spread.
- Look up the value per point per unit in the contract specification.
- Divide the risk amount by stop distance × value per point per unit.
- Round the result down to the platform's lot step.
- Recalculate the money at risk with the rounded size, and check the margin needed.
On MetaTrader 5 (MT5), the contract size and volume step are in the symbol's specification: right-click the symbol in Market Watch and choose Specification. Check them on your own platform before your first trade on any instrument.
Worked examples: $100,000 account, 1% risk
In each example the risk amount is 1% of $100,000, which is $1,000.
EUR/USD
For example, you plan to buy EUR/USD at 1.0850 with a stop at 1.0825, below a recent swing low.
- Stop distance: 1.0850 − 1.0825 = 0.0025, or 25 pips
- Value per pip per standard lot: $10
- Position size: 1,000 ÷ (25 × 10) = 1,000 ÷ 250 = 4.00 lots
- Check: 4 × 25 × $10 = $1,000
If you include a 1-pip spread, the stop distance becomes 26 pips: 1,000 ÷ 260 = 3.846 lots, which rounds down to 3.84 lots. The risk at the stop is then 3.84 × 26 × $10 = $998.40.
Gold (XAU/USD)
For example, you plan to buy gold at $2,400 with a stop at $2,392, on a platform where one lot is 100 oz.
- Stop distance: $2,400 − $2,392 = $8
- Value per $1 move per lot: 100 oz × $1 = $100
- Position size: 1,000 ÷ (8 × 100) = 1,000 ÷ 800 = 1.25 lots
- Check: 1.25 × 100 × $8 = $1,000
Contract size changes everything here. If your platform's gold lot were 10 oz, the same trade would need 1,000 ÷ (8 × 10) = 12.5 lots. Get the contract size wrong by a factor of ten and your risk is wrong by a factor of ten.
Bitcoin (BTC/USD)
For example, you plan to buy BTC at $65,000 with a stop at $63,800.
- Stop distance: $65,000 − $63,800 = $1,200
- Value per $1 move per BTC: $1
- Position size: 1,000 ÷ (1,200 × 1) = 0.8333 BTC
- Rounded down to a 0.01 step: 0.83 BTC
- Check: 0.83 × $1,200 = $996
The same formula works for sell trades. The stop sits above the entry, and the stop distance is the stop minus the entry.
Rounding down to the lot step
Platforms accept sizes only in fixed increments, called the volume step or lot step. Forex is commonly traded in steps of 0.01 lots, while crypto steps vary by symbol.
Always round down. Rounding 3.846 lots up to 3.85 adds risk you did not plan for; rounding down to 3.84 keeps you just under it. The difference on one trade is small, but the habit protects you from bigger errors.
Two edge cases:
- The result is below the minimum volume. If the formula gives 0.004 lots and the minimum is 0.01, the trade is too big for your risk with that stop. Skip it, or wait for a setup where a tighter stop is still valid. Do not round up to the minimum.
- The result is very large. A tiny stop produces a huge size. Check that the stop sits beyond real structure and outside normal noise, and that the margin is available.
Why size follows the stop, not the other way round
Many beginners work backwards: they decide to trade 2 lots, then put the stop wherever the loss feels acceptable. That places the stop by money instead of by market structure, often inside normal price noise, so it gets hit by moves that say nothing about whether the idea was right.
Work the other way and the stop goes where the chart says, while the size absorbs the difference. With the same $1,000 risk on EUR/USD:
- A 20-pip stop allows 1,000 ÷ (20 × 10) = 5 lots.
- A 50-pip stop allows 1,000 ÷ (50 × 10) = 2 lots.
Both trades lose $1,000 if stopped out. A wider stop does not mean more risk, only a smaller position. For how stop orders fill and where to place them, see order types explained.
Quick-reference table
Sizes for a $100,000 account risking 1% ($1,000), with a 100 oz gold lot, BTC sized in coins and sizes rounded down to 0.01:
| Instrument | Stop distance | Value per unit | Position size |
|---|---|---|---|
| EUR/USD | 10 pips | $10 per pip per lot | 10.00 lots |
| EUR/USD | 25 pips | $10 per pip per lot | 4.00 lots |
| EUR/USD | 50 pips | $10 per pip per lot | 2.00 lots |
| Gold | $5 | $100 per $1 per lot | 2.00 lots |
| Gold | $8 | $100 per $1 per lot | 1.25 lots |
| Gold | $20 | $100 per $1 per lot | 0.50 lots |
| BTC | $500 | $1 per $1 per coin | 2.00 BTC |
| BTC | $1,200 | $1 per $1 per coin | 0.83 BTC |
| BTC | $3,000 | $1 per $1 per coin | 0.33 BTC |
To adapt it, scale in proportion and round down again. Risking 0.5% halves every size, and so does a $50,000 account at 1%.
Check the margin
Margin is separate from risk, but the position still has to fit. Notional value is size × contract size × price, and the margin needed is notional ÷ leverage.
- 4 lots of EUR/USD at 1.0850: 4 × 100,000 × 1.0850 = $434,000 notional, or $4,340 of margin at 100×.
- 1.25 lots of gold at $2,400: 1.25 × 100 × 2,400 = $300,000 notional, or $3,000 of margin at 100×.
- 0.83 BTC at $65,000: 0.83 × 65,000 = $53,950 notional. Without leverage (1×), that full amount has to fit within your balance.
If margin is the limiting factor, trade a smaller size and accept a smaller risk than planned. Pips, lots and leverage explains margin in more detail.
Common mistakes
- Using $10 per pip on every pair. That value is for pairs quoted in US dollars. On USD/JPY, a pip on one lot is 1,000 yen, about $6.67 at 150.00. Convert before you size.
- Forgetting the spread. A stop measured on the bid chart ignores the spread you pay on entry. Add the spread to the stop distance.
- Assuming the contract size. Mixing up a 10 oz and a 100 oz gold lot turns a planned 1% risk into 10% or 0.1%. Read the specification.
- Rounding up. Small overshoots add up over many trades. Round down to the lot step every time.
- Adding to a losing position. It raises risk beyond the plan. Size once, before you enter.
Key takeaways
Position size = Risk amount ÷ (Stop distance × Value per point per unit).- Choose the risk, place the stop where the idea fails, then calculate the size. Size follows the stop.
- On a $100,000 account risking 1%, a 25-pip EUR/USD stop allows 4 lots, an $8 gold stop allows 1.25 lots at 100 oz per lot, and a $1,200 BTC stop allows 0.83 BTC.
- Round down to the lot step and recheck the money at risk.
- Confirm the contract size and volume step on your own platform before you trade.
Frequently asked questions
How many lots should I trade on a $100,000 account?
It depends on your risk per trade and your stop distance, not on the account size alone. At 1% risk ($1,000), a 25-pip EUR/USD stop allows 4 lots, while a 50-pip stop allows 2 lots. Work it out from the stop on every trade.
Should I calculate position size from balance or equity?
Balance is simple and steady, while equity includes the running profit or loss of open trades. If you hold several positions at once, using equity, or subtracting the risk already open, keeps your total exposure honest. Pick one method and use it consistently.
Does leverage change my position size?
No. Your position size comes from your risk amount and stop distance. Leverage only decides how much margin that position ties up, so it can cap the largest position you can open, but it is never a reason to open a larger one.