Three inputs, one output
Position size is not a feeling. It is the answer to a sum with three inputs:
- 1.Account risk — how much money you will lose if the stop is hit. 1% of 2,000 USD is 20 USD.
- 2.Stop distance — how many pips from entry to stop. Decided by the chart, not by the risk.
- 3.Pip value per lot — 10 USD for a standard lot on USD-quoted pairs.
volume (lots) = account risk ÷ (stop distance in pips × pip value per lot)
Worked example: EURUSD
Account 2,000 USD, risk 1% = 20 USD. Entry 1.0850, stop 1.0820 → 30 pips.
Volume = 20 ÷ (30 × 10) = 0.066 lots, rounded down to 0.06.
Check: 0.06 lots × 30 pips × 10 USD = 18 USD. Under the limit. Good.
Worked example: gold
XAUUSD has a contract size of 100 ounces, so one lot moves 1 USD per 0.01 of price — 100 USD per 1.00 move.
Account 2,000 USD, risk 20 USD. Entry 2,350.00, stop 2,342.00 → 8.00 of price.
Volume = 20 ÷ (8.00 × 100) = 0.025 lots, rounded down to 0.02.
What changes when the stop changes
| Stop (pips) | Volume at 20 USD risk |
|---|---|
| 15 | 0.13 |
| 30 | 0.06 |
| 60 | 0.03 |
| 120 | 0.01 |
The risk in money is 20 USD in every row. A wide stop is not a bigger loss; it is a smaller position. That is the whole discipline in one table.
Summary
Risk per trade divided by stop distance times pip value gives volume. Decide the stop from the chart, the risk from your plan, and let the formula decide the lots.