Orders & Risk
Position size
How many lots you trade, calculated from your account size, your risk percentage and your stop distance — not from how confident you feel.
Also called: position sizing
In practice
On a $10,000 account risking 1% ($100) with a 25-pip stop on EUR/USD, the correct size is $100 ÷ (25 pips × $10/pip) = 0.40 lots. If the same setup appears with a 50-pip stop, size drops to 0.20 lots — the risk stays $100 even though the stop is wider.
Why it matters for traders
Position size is the single control that keeps every trade's risk identical, which is what makes a string of losses survivable. Get it right and ten losers in a row costs a recoverable 10%; get it wrong and a single large position can end an account. It is the most important calculation you make, executed before the order ticket opens.
Common pitfall
The most dangerous error is sizing positions by confidence — bigger lots when a setup 'feels certain.' A high-conviction trade that loses is exactly the one that blows up an account, because it was oversized. Risk percentage and stop distance set the lot, full stop. A 'sure thing' with a 30-pip stop risks the same dollars as a marginal trade with a 30-pip stop; confidence must never change the size.
Lessons that use this term
- Lot sizes and position size
Standard, mini and micro lots, pip value per lot, and how to pick a size your account can survive.
- Position sizing and the 1% rule
Turning a percentage of your account into an exact lot size, every time.
- Margin call & stop out
The two levels where the broker steps in — and why correct position sizing means you never meet either.
Related tips
Related terms
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