Position sizing, step by step

A worked EUR/USD example, account-currency checks and the effect of broker lot increments.

ATFC editorial · Published November 1, 2026 · Educational arithmetic

Start with a cash budget, not a lot size

A position-size calculation connects an account balance, an explicitly chosen risk percentage and a stop distance. For a hypothetical USD account with a $10,000 balance and a 1% input, the cash budget is $100. This example does not recommend that percentage. It simply gives the arithmetic a common unit: USD. Changing leverage does not change that starting budget, and using available margin as the budget would answer a different question.

Turn the price difference into pips

Suppose a long EUR/USD example has an entry of 1.1000 and a stop of 1.0970. The difference is 0.0030. Dividing by the conventional EUR/USD pip size of 0.0001 gives 30 pips. A five-decimal quote may show fractional pips; counting its last digits as whole pips would be a tenfold error. The position-size tool accepts a pip distance or derives it from entry and stop prices. For a short example, the stop must be above entry.

Match pip value and budget currencies

With 100,000 base units per lot, one EUR/USD pip is 100,000 × 0.0001 = $10 per lot. A 30-pip move therefore corresponds to $300 per lot before costs. In a GBP account, convert that $10 to GBP first, then compare it with a GBP budget. Dividing a GBP budget by a USD loss mixes units. The tool uses dated reference conversion data unless you enter a custom rate appropriate to the example.

Round down to a tradable increment

Without cost inputs, raw size is $100 / $300 = 0.333333 lots. If the broker accepts 0.01-lot increments, rounding down gives 0.33 lots, or 33,000 base units under this contract convention. The modeled price risk is 0.33 × 30 × $10 = $99. Rounding up to 0.34 lots would make it $102. A result of zero means the specified lot increment cannot fit the budget; it is not an instruction to use a larger budget.

Include costs deliberately

The optional position-size cost inputs reserve fixed account-currency costs and add estimated costs per lot to the modeled stop cost. With these inputs left at zero, the calculation is price risk only. If spread is already reflected in the entry and stop execution prices, adding the same spread again double-counts it. Costs that depend on time or execution must be estimated separately; a calculator cannot know a future fill.

Check what the answer does not establish

Confirm the broker’s base units per lot, allowed increments and minimum order size; the increment input alone does not represent every minimum-size rule. Compare the resulting position with its separate margin requirement. Stop orders can execute at a different price during gaps or thin trading, and currency conversion can change. The output is a deterministic estimate under stated assumptions, not a guarantee of maximum loss or suitability.

Sources and conventions

Examples are hypothetical. Arithmetic follows the formulas documented in our methodology. Broker contract specifications determine actual lot, margin and execution conditions. These sources document definitions and data; a source link does not imply endorsement of SanForex or a trading service.

These materials are prepared with AI assistance and checked against worked examples and deterministic calculation tests where applicable. They are not an expert suitability assessment or investment advice.

Open position size tool ↗