Forex lot sizes and position sizing – how much should you trade?

Position size is the part of trading you control completely, and it has more influence on whether you survive than any entry signal.

#The lot sizes

On MetaTrader and most platforms you type the size in lots with two decimals: 0.01 is a micro lot, 0.10 a mini lot. For index and commodity CFDs, "1 lot" means whatever the broker's contract specification says – for example €1 or €25 per point on the Germany 40.

#From lots to money at risk

What matters is not the lot size but what you lose if you are wrong:

money at risk = stop-loss distance (pips) × pip value × lots

A 30-pip stop on 0.5 lots of EUR/USD risks 30 × $10 × 0.5 = $150, or about €132 at 1.1350.

#A simple, robust method: fixed-percentage risk

1. Decide how much of your account you will risk per trade. Many experienced traders use 0.5–2%.
2. Decide where your stop-loss goes based on the chart – where your idea is proven wrong – not on how much you want to make.
3. Calculate the position size that makes the stop-loss equal to your risk amount.

lots = (account × risk %) ÷ (stop pips × pip value per lot)

With €5,000, 1% risk (€50) and a 25-pip stop on EUR/USD (≈ €8.81 per pip per lot): 50 ÷ (25 × 8.81) ≈ 0.23 lots.

Position size calculator
Size a trade from your account, risk % and stop-loss distance.

#Why fixed-percentage sizing works

• Losing streaks are normal. At 1% risk, ten losses in a row cost about 10% of the account; at 10% risk they cost about 65%.
• Positions automatically shrink as the account falls and grow as it rises.
• It separates two decisions – where is my stop? and how much can I lose? – that beginners often mix up.

Our drawdown calculator shows how much risk per trade changes the likelihood of a deep drawdown, even with the same strategy.

#Watch total exposure

Five trades each risking 1% on EUR/USD, GBP/USD, EUR/CHF and two euro crosses are not five independent bets: they are largely one bet on the euro or the dollar. Keep an eye on the combined exposure and on the margin used, which you can check with the ESMA margin calculator.