Position size calculation: the formula and 4 examples

You know you should risk 1% per trade. But when you open the position, you put on 0.5 lot “because it feels reasonable”. The result: depending on how wide your stop is, your real risk swings between 0.3% and 3% from one trade to the next, without you knowing it.

This guide gives you the exact formula for position size calculation, four worked examples on the most traded markets, a ready-to-use table, and the mistakes that distort the calculation.

What is position size?

Position size is the volume you open on a trade, expressed in lots in MetaTrader. It is calculated from two choices you make beforehand: how much you accept to lose if the stop is hit, and where your stop is.

This calculation is what turns a risk rule (“1% per trade”) into a concrete decision. Without it, your rule only exists on paper.

The position size formula

Number of lots = amount at risk ÷ (stop distance × value of one point for 1 lot)

The three terms, in your account currency:

1. Amount at risk = capital × risk percentage. With €10,000 and 1%, that is €100.
2. Stop distance = the gap between your entry price and your stop loss, in pips or points.
3. Value of one point for 1 lot = what you gain or lose when price moves one pip (or one point) with 1 lot. It depends on the asset and the account currency.

The product of the last two terms gives your loss for 1 lot if the stop is hit. Divide your risk by that loss and you get the size.

Position size follows from the stop, never the other way around. If your stop needs to be wider, your position needs to be smaller.

Example 1: EURUSD on a euro account

€10,000 account, 1% risk, 25-pip stop. With EURUSD at 1.10 (illustrative example):

On EURUSD, 1 standard lot represents 100,000 euros and a pip is worth 10 dollars. Since your account is in euros, you convert those 10 dollars at the current rate.

Example 2: USDJPY, a yen pair

Same account, same risk, 40-pip stop. On yen pairs, a pip is 0.01. For 1 lot of 100,000 dollars, a pip is therefore worth 1,000 yen. With EURJPY at 160 (illustrative example):

Example 3: gold (XAUUSD)

At most brokers, 1 lot of gold represents 100 ounces: a 1-dollar move is worth 100 dollars per lot. Check it in the symbol specification, because some brokers use a different contract size. Stop of 8 dollars, EURUSD at 1.10 (illustrative example):

With 0.13 lot, your real risk is €94.55. Rounding up to 0.14 lot would have taken it to €101.82, above your rule.

Example 4: an index (DAX, Nasdaq, S&P 500)

For indices, the value of one point per lot changes from broker to broker: it can be €1, €10 or €25 per point depending on the contract size. There is no universal value to memorize. If your broker shows €1 per point for 1 lot and your stop is 50 points away (illustrative example):

The same calculation at a broker where 1 lot is worth €10 per point would give 0.2 lot. This is the main source of mistakes on indices.

Position size table by stop distance (EURUSD)

For €100 of risk on EURUSD, euro account, pip worth €9.09 per lot (EURUSD at 1.10):

For a different amount at risk, size scales proportionally: with €200 of risk, double the sizes; with €50, halve them.

Where to find the value of a point in MetaTrader

The official MetaTrader 5 documentation explains it: in the Market Watch window, right-click a symbol and choose Specification to see the conditions set by your broker. You will find:

With tick value and tick size, you can work out the value of one point on any symbol without relying on an online calculator.

Leverage and position size: the confusion to avoid

Leverage does not set your risk. It sets the margin your broker ties up and the maximum size you can open.

Since 2018, ESMA, the European markets regulator, has capped leverage for retail clients on CFDs: 30 to 1 on major currency pairs, 20 to 1 on non-major pairs, gold and major indices, down to 2 to 1 on cryptocurrencies. With €10,000 and leverage of 30, you could open up to €300,000 of position, or 3 lots of EURUSD.

In example 1, the right size was 0.44 lot, or €44,000 of exposure: an effective leverage of 4.4. Maximum leverage is a limit, not a target. Treating it as a goal is one of the quickest routes to a deep drawdown.

The 5 mistakes that distort your calculation

1. Choosing the size before the stop. You then place the stop where the loss “feels okay”, not where the market invalidates your idea.
2. Forgetting the currency conversion. A pip worth 10 dollars is not a pip worth 10 euros. On a euro account, the gap is about 9% with EURUSD at 1.10.
3. Rounding up. Systematic rounding up adds a few percent of risk to every trade.
4. Ignoring commission and spread. If your broker charges $7 per lot round trip, add it to your loss per lot before dividing. On a tight stop, it changes the size.
5. Increasing size after a loss. That is the mechanism of revenge trading: the calculation must start from your current capital and your rule, never from what you want to win back.

Checking your sizing discipline with TradeIA

Calculating the right size is half the job. The other half is checking that you actually apply it. When you import your MT4, MT5, cTrader or TradingView history into TradeIA, the analysis compares the risk of your trades with each other and flags when it varies too much: when the standard deviation of your risk exceeds half of your average risk. It also spots losing streaks during which your size goes up.

That way you see whether your 1% rule exists in your history, or only in your head. To go further, record the size and the risk in R of every trade in your trading journal.

In short

Number of lots = amount at risk ÷ (stop distance × value of one point for 1 lot). Place the stop first, calculate the size next, and always round down. Check the value of a point in the symbol specification, include commission, and never confuse maximum leverage with sensible size. Do the calculation on every trade: it is what makes your risk rule real.