The lot size formula
Lots = (balance × risk %) ÷ (stop distance × value of one unit per lot). For EURUSD, one pip is worth $10 per standard lot, so risking $1,000 with a 20-pip stop means 5 lots.
For pairs quoted in another currency, such as USDJPY or USDCAD, the pip value depends on the current price, which is why the calculator uses live quotes.
How much should I risk per trade on a prop firm challenge?
Most traders who pass risk between 0.5% and 1% per trade. With a 4% daily loss limit, 1% risk allows four losing trades before the limit; 0.5% gives you eight.