Position Sizing
Determining the correct lot size for each trade based on account size, risk percentage, and stop loss distance
Position sizing is the process of calculating how many lots or units to trade based on three inputs: account balance, risk percentage, and stop loss distance. It is the mechanical implementation of risk management. A lot size calculator automates this — you input your account size, desired risk percentage, and stop loss in pips, and it outputs the exact lot size. Tools range from free EA calculators (Position Size Calculator for MT4/MT5) to paid solutions (Magic Keys with hardware buttons, Trade Assistant). The goal is to minimize execution time — from seeing a valid setup to placing the trade should take seconds, not minutes of manual calculation.
✓How to Recognize
- •Three inputs: account balance, risk percentage, stop loss distance in pips
- •Output: exact lot size for that specific trade
- •Use integrated tools (EA, Magic Keys, Trade Assistant) over manual web calculators
- •Fast execution: reduce time from setup identification to trade placement
⚡How to Avoid
- →Using web-based calculators that take 30-60 seconds (missed entries)
- →Trading without calculating — "just use 0.5 lots" creates inconsistent risk
- →Not accounting for pip value differences across currency pairs
- →Overriding the calculator output based on "feel" or conviction