What is position sizing in forex?
Position sizing is calculating how many lots to trade based on your account balance and risk tolerance. It ensures you never risk more than a specified percentage (typically 1-2%) per trade, protecting your capital.
Position Size Calculator
Calculate the optimal position size based on your account balance, risk tolerance, and stop loss distance. Essential for proper risk management.
Enter your account balance, risk percentage, stop loss in pips, and currency pair. The calculator determines the lot size that limits your risk to the specified percentage.
Calculate Position Size
How It Works
Position sizing determines how many lots to trade based on your risk tolerance. The formula: Risk Amount = Account Balance × (Risk % / 100), then Position Size = Risk Amount / (Stop Loss Pips × Pip Value per Lot).
Example: $10,000 account, 2% risk, 50 pip stop loss on EUR/USD. Risk amount = $200. Pip value for 1 lot = $10. Position size = $200 / (50 × $10) = 0.4 lots.
This ensures you never risk more than your specified percentage, protecting your account from large losses.
Frequently Asked Questions
What risk percentage should I use?
Most professional traders risk 1-2% per trade. Beginners should use 0.5-1%. Never risk more than 5% on a single trade. The risk percentage determines how much of your account balance you're willing to lose if the stop loss is hit.
How do I determine stop loss distance?
Stop loss should be placed at a logical support/resistance level or based on ATR (Average True Range). Tighter stops (20-30 pips) require smaller position sizes; wider stops (50-100 pips) allow larger positions. Use technical analysis to find appropriate levels.
What is margin required?
Margin is the amount of capital required to open a position. It's calculated as (Position Size × Contract Size × Price) / Leverage. Higher leverage requires less margin but increases risk. Ensure you have sufficient free margin in your account.