Risk Management
Position Size
The number of units or lots traded in a single position.
Full Definition
Position size refers to how large your trade is, measured in lots or units. Proper position sizing ensures you risk only a predetermined percentage of your account on each trade. It's calculated based on your stop loss distance, account size, and risk percentage.
Example
With a $10,000 account risking 1% ($100) and a 20-pip stop loss where pip value is $1/pip, position size = $100 ÷ 20 = 5 mini lots.
Formula
Position Size = (Account Risk %) × Account Balance ÷ (Stop Loss in Pips × Pip Value)Related Terms
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