Question 1

What is position sizing?

Accepted Answer

Position sizing decides how many units, shares or lots to buy or sell so that if your stop-loss is hit you lose only a planned percentage of your account — typically 1% to 2%. It is the single most important risk-management rule for traders.

Question 2

How is position size calculated?

Accepted Answer

Formula: Position Size = (Account Balance × Risk %) ÷ (Stop-Loss Distance × Per-Unit Value). For a $10,000 account risking 1% with a 50-pip stop on EUR/USD ($10/pip per standard lot), position size = ($100) ÷ (50 × $10) = 0.2 lots.

Question 3

What is a standard lot in forex?

Accepted Answer

A standard lot is 100,000 units of the base currency. A mini lot is 10,000 units and a micro lot is 1,000 units. Pip value per standard lot on most USD-quote pairs is roughly $10.

Question 4

Is this financial advice?

Accepted Answer

No. This calculator provides mathematical risk sizing only. It is not investment advice. Always do your own research and consult a licensed advisor before trading.