2 November 2026 · 4 min read
How much you risk on a trade: a simple sum
Position size isn't chosen by how much you want to make, but by how much you accept to lose. The sum fits on one line.
The formula
Start from the amount you accept to lose if the market reaches your stop loss. The position size comes from it: the amount at risk divided by the distance to the stop, times the value of a pip.
Position size = amount at risk ÷ (distance to the stop in pips × pip value per lot).
An example on a $100,000 simulated account
You choose to risk 1%, which is $1,000. You want to buy EURUSD with a stop 50 pips away. A pip on a standard lot is worth about $10, so 50 pips is $500 per lot.
$1,000 divided by $500 gives 2 lots. Commission and spread add to the loss, so the real risk is a little higher.
Why it matters for the account's limits
Risk per trade tells you how many losses in a row you can take before a limit. On an account with a 5% daily loss and a 10% maximum loss, at 1% risk you have room for five full losses in a day and ten in total.
At 3% risk, two losses in a row and one small one take you to the daily limit. Limits are measured on equity, so open positions count too.
Three things to check before an order
- Where the stop loss is, and why there.
- How much you lose if it's hit, costs included.
- How far you are from the daily limit after that loss.
Educational material, not investment advice. Aegis Traders accounts are simulated, and past results guarantee nothing.
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