Position size is the only part of a trade you fully control. Getting it right makes every stop cost the same percentage of your account, no matter the market. The formula is the same everywhere: lots = money at risk ÷ (stop distance × value per unit of distance per lot).
Step 1: money at risk
Decide the percentage of the account you risk per trade, usually 0.5–1% in a challenge. On a $50,000 account, 0.5% is $250.
Step 2: stop distance
Place the stop where the setup is invalid (beyond a level or a swing), then measure the distance: in pips for forex, in dollars for gold, in points for indices, in dollars for crypto.
Step 3: value per unit per lot
- EURUSD, GBPUSD, AUDUSD: about $10 per pip per standard lot.
- Gold (100 oz contract): $100 per $1 move per lot.
- Indices: depends on the contract; check the value per point in the instrument info.
- Crypto: depends on coins per lot; for 1 BTC per lot, a $1 move is $1 per lot.
Worked examples ($50,000 account, $250 risk)
- EURUSD, 20-pip stop: 250 ÷ (20 × 10) = 1.25 lots.
- Gold, $8 stop: 250 ÷ (8 × 100) = 0.31 lots.
- Bitcoin, $1,500 stop with 1 BTC per lot: 250 ÷ 1,500 = 0.17 lots.
Common mistakes
- Using the same lot size on every market.
- Moving the stop to fit a lot size you wanted, instead of the opposite.
- Forgetting commissions on very small stops.