Forex Position Size Calculator

This position size calculator helps you decide how big a currency trade should be. You tell it your account balance, the percentage you are prepared to lose if the trade fails, and how far away your stop-loss is. It returns the size, in lots, at which hitting the stop would cost exactly that amount, before costs.

The position size calculator formula

The top half is the money at risk. The bottom half is how much one lot would lose if the stop were hit. Dividing one by the other gives the number of lots that keeps the loss within your limit. The pip value per lot is worked out the same way as in our pip calculator.

A worked example

With illustrative numbers: your balance is $8,000 and you decide to risk 1.5% on a EUR/USD trade, which is $8,000 × 0.015 = $120. Your stop-loss is 40 pips from the entry price. One standard lot of EUR/USD is worth $10 a pip, so a 40-pip loss on one lot would be $400.

Position size = $120 ÷ (40 × $10) = 0.3 lots. If the stop is hit, 0.3 lots × 40 pips × $10 = $120, as planned.

Now tighten the stop to 20 pips and cut the risk to 1% ($80): the answer becomes $80 ÷ (20 × $10) = 0.4 lots. A closer stop allows a larger position for the same money at risk, but also makes it more likely the stop is triggered by ordinary price noise.

Reading the result sensibly

• Round down, not up. Platforms trade in fixed steps, often 0.01 lots, so round the result down to the nearest step you can actually place.
• Add costs. The spread and any commission add to the loss if the stop is hit, and the stop itself can fill at a worse price in a fast market or over a weekend gap.
• Check the margin. A position sized for risk may still need more margin than you expect; test it in the margin calculator.

Many traders keep the risk on any single trade to a small percentage of the account so that a run of losses, which will happen, does not end the account. The right figure is a personal decision; the calculator only does the arithmetic.