💱 Forex & CFD Trading
Forex Position Sizing: The Only Formula You Need
Use this simple risk-based formula to size every forex trade correctly. Includes examples for micro/mini/standard lots.
Key Takeaways
- •Position Size = Risk $ ÷ (Stop pips × Pip value)
- •Choose 0.5–1% risk per trade for safe money management
- •Recalculate when pair or account currency changes
The Rule
- 1. Choose risk per trade (e.g., 1% of $2,000 = $20)
- 2. Measure stop distance in pips (entry to stop)
- 3. Find pip value for your lot size/pair
- 4. Position Size = Risk ÷ (Stop pips × Pip value)
Position Sizing Formula
Position Size = Risk $ ÷ (Stop Distance in Pips × Pip Value)
The universal forex position sizing formula
Example (EUR/USD, USD account)
Equity: $2,000; Risk = 1% = $20
Stop: 25 pips; Pip value per mini lot ≈ $1
Size: $20 ÷ (25 × $1) = 0.80 mini lots = 0.08 lot
Choosing Your Risk Percentage
0.5% Risk
Ultra-conservative, good for beginners
1% Risk
Balanced approach, most common
2% Risk
Aggressive, requires experience
Lot Size Reference
Micro Lot (0.01)
1,000 units
~$0.10/pip (USD pairs)
Mini Lot (0.10)
10,000 units
~$1/pip (USD pairs)
Standard Lot (1.00)
100,000 units
~$10/pip (USD pairs)
Pro Tips & Common Mistakes
Pro Tips
- • Recalculate when pair or account currency changes
- • Use scripts/EA or built-in calculators
- • Include a small buffer for spread/slippage
Common Mistakes
- • Using fixed lot sizes regardless of stop distance
- • Ignoring spread/slippage near news
- • Not adjusting for different account currencies
Frequently Asked Questions
What risk % is safe?
0.5–1% is common; adapt to your edge and psychology.
Include commissions?
Yes—assume a small buffer.
What about partial exits?
Plan them—sizing still uses initial stop distance.