Position sizing

Updated 2026-09-20

Definition

Calculating the lots to open from the chosen risk and the stop distance.

Lots = (balance × risk %) ÷ (stop in pips × pip value per lot). If the stop is wide you reduce lots, you don't tighten the stop.

Balance 5,000, risk 1%, stop 25 pips, pip worth 10: 50 ÷ (25 × 10) = 0.20 lots.

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Educational content, not financial advice. Trading involves risk.