Lot sizes and position sizing: the maths behind every trade
Standard, mini, micro — and the three-line calculation that tells you how many to trade.
- Standard lot = 100,000 units; mini = 10,000; micro = 1,000.
- Position size = (account × risk %) ÷ (stop loss in pips × pip value).
- Fix your risk per trade first; the lot size is the output, not the input.
The three sizes
- Standard lot: 100,000 units of the base currency. ≈ $10 per pip on EUR/USD.
- Mini lot (0.1): 10,000 units. ≈ $1 per pip.
- Micro lot (0.01): 1,000 units. ≈ $0.10 per pip.
Most brokers let you trade in increments of 0.01 lots, so you can size almost exactly.
The position-sizing formula
Decide three things before every trade:
- Account size: say $5,000
- Risk per trade: say 1% → $50
- Stop loss distance: say 25 pips
Position size = $50 ÷ (25 pips × $10 per pip per standard lot) = 0.2 lots (two mini lots).
If the trade hits the stop, you lose $50. If the stop was 50 pips away, the formula gives 0.1 lots and you still lose $50. Risk stays constant; the lot size flexes.
Why this matters more than entries
Two traders with the same entries and exits can have completely different results purely from sizing. Consistent risk is what makes a strategy's statistics mean anything.
The cost of skipping this
Random position sizes make your results random, so you never find out whether your approach works.
Not investment advice. This is general information and education, written without knowledge of your circumstances. It is not a recommendation to buy or sell any instrument. Past performance is not a reliable indicator of future results. Trading leveraged products carries a high risk of losing money. Risk warning