Risk
What is Position sizing?
By the verify.trading team · Last reviewed · How we write
Key points
- Size = risk amount / (stop in pips x pip value per lot).
- Stop from the market, risk from your plan.
- Do not size up to recover a loss.
Position sizing explained
The formula is risk amount divided by stop distance times the value of one pip per lot. Because the stop comes from the market and the risk amount comes from you, the size follows from both.
Consistent sizing keeps any single loss small and makes results comparable from trade to trade. Sizing up after wins, or to win a loss back, breaks this.
Example
10,000 account, 1% risk, 20 pip stop, 10 per pip per lot: 100 / (20 x 10) = 0.50 lots.
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