Log in Open account

Costs & risk

Position sizing

Position sizing is deciding how large a trade to open, usually from the amount you are prepared to lose if the stop loss is hit. It links account size, stop-loss distance and pip value; the amount at risk is your own decision.

Also called: position size, trade sizing, lot sizing, money management

Hypothetical example

Hypothetically, a trader decides to risk at most $50 on a trade with a stop loss 50 pips away. At $1 per pip (0.1 lots of EUR/USD), 50 pips is $50, so 0.1 lots fits that limit; 0.2 lots would put $100 at risk.

Used in these guides

Costs & risk8 min read
Position sizing: how to work out how many lots to trade
A step-by-step method for setting the size of a trade from the amount you are prepared to lose, your stop loss and pip value.
Costs & risk8 min read
Stop loss and take profit
How stop loss and take profit orders close a position automatically, how to read the distance in pips and money, and their limits.

Back to the glossary