Size follows risk, not conviction
The most common sizing method among professional traders is fixed-fractional sizing: risk the same percentage of your account on each trade. You decide the loss first, place the stop where the market says it belongs, and the position size is whatever makes those two fit.
The position size calculator applies this to stocks, crypto, forex and futures, each with its own value-per-point logic.
Choosing a risk percentage
The risk percentage is a trade-off between growth and survivability. Higher risk compounds faster when things go well and digs deeper holes when they don't. Look at what a streak of losses costs at different levels:
| Risk per trade | After 5 losses | After 10 losses | Gain needed to recover from 10 |
|---|---|---|---|
| 0.5% | −2.5% | −4.9% | +5.1% |
| 1% | −4.9% | −9.6% | +10.6% |
| 2% | −9.6% | −18.3% | +22.4% |
| 5% | −22.6% | −40.1% | +67.0% |
Ten consecutive losses sounds extreme, but for a strategy that wins 40% of the time it's an event you should expect to see eventually. Size so that the worst realistic streak is survivable — financially and psychologically.
Why stop distance matters so much
Because risk is fixed, stop distance directly controls position size. Halve the stop distance and you can double the size for the same risk. That's tempting, but tighter stops get hit by ordinary noise more often. Many traders base stop distance on volatility (for example, a multiple of the Average True Range) so that size automatically shrinks in volatile markets and grows in quiet ones.
Forex: lots, pips and currency conversion
In forex, value per point depends on the lot size and on the exchange rate between the pair's quote currency and your account currency. For EUR/USD on a USD account, one pip on one standard lot is worth $10. For USD/JPY it's 1,000 JPY, which is worth $10 only when USD/JPY trades at 100 — at 150 it's about $6.67. Using a fixed $10 for every pair silently mis-sizes most trades.
Multiple open positions
Fixed-fractional sizing assumes trades are independent. Five long positions in correlated tech stocks, each risking 1%, behave more like a single 5% position when the sector sells off. Many traders cap total open risk (for example at 4–6%) and reduce per-trade risk when positions are correlated.
Reviewing actual exposure across past trades is easier with a journal; the Trading Metrics documentation describes how the platform reports risk across a trade history.
Not financial advice. This guide is general education and does not consider your personal situation. Trading involves substantial risk of loss. Read the full disclaimer.