Part 3 · Manage risk

09Choose the loss before the lot size

Decide what you can lose, then let the formula pick the size.

Margin is the deposit needed to hold a position. It is not the amount you are risking. A small margin can support a large position and a large loss.

Position-size formula. Lots = (cash risk budget − fixed costs) / [(stop pips × pip value per lot) + extra costs per lot].

Calculator 3 of 5

Account equity ($)Extra cost allowance (pips/lot)

Budget $5.00 · Risk per 1.00 lot $320 · Calculated 0.015625 lots → round down to 0.01 lot, planned loss $3.20

Honest note

If the smallest permitted size exceeds your ceiling, the correct size is zero. Gaps and slippage can still exceed a careful budget.

Key takeaway

Always round size down, never up.

Try it

Enter your own demo balance in the calculator and note the largest size that fits.

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