Part 4 · Protect the account

11Size from the stop distance

Decide the loss first; the lot size follows.

Formula. Cash budget = equity × risk fraction. Lots = cash budget / [(stop pips × pip value per lot) + extra costs per lot], rounded down to the allowed lot step. Subtract fixed cash fees first.

Equity and 0.25%	$5,000 → $12.50
Pip value, standard lot	$10
Loss per standard lot	(46 + 2) × $10 = $480
Calculated size	$12.50 / $480 = 0.0260417 lots
Round down (0.01 step)	0.02 lots
Loss at the stop	46 × $0.20 = $9.20
Including allowance	48 × $0.20 = $9.60

Position size, step by step.

1Round down at the 0.01 step, never up.

Hypothetical illustration, not real market data.

Tool · Position-size calculator

Size from the stop distance

Equity ($)Risk (%)Stop (pips)Pip value per lot ($)Cost allowance (pips)

Budget $12.50 · Risk per 1.00 lot $480 · Calculated 0.0260417 lots → round down to 0.02 lots, planned loss $9.60

Honest note

The allowance is a teaching assumption. Do not add the spread twice, and remember that gaps can exceed it.

Key takeaway

Always round down. If the smallest lot exceeds the budget, the size is zero.

Try it

Enter your own demo balance and note the largest size that fits a 46-pip stop.

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