What Is Position Sizing?
Position sizing is the process of calculating exactly how many lots to trade per position based on maximum acceptable risk and stop loss size. It is the skill that transforms a good strategy into consistent results.
The Complete Position Sizing Formula
Step 1: Risk in $ = Capital × % Risk
Step 2: Calculate pip value of the instrument
Step 3: Lot size = Risk in $ ÷ (Stop in pips × Pip value)
Example: GBP/USD
Account $50,000 | Risk 1% = $500 | Stop 40 pips | Pip value (1 lot): $10
Lot = $500 ÷ (40 × $10) = $500 ÷ $400 = 1.25 lots
Dynamic vs. Fixed Position Sizing
Dynamic sizing recalculates the lot every trade based on current equity — as capital grows, the lot grows proportionally. Fixed always uses the same lot. Dynamic is superior for controlled compound growth.
Automating the Calculation
ForexTracker logs risk per trade and alerts you when you are outside defined parameters — complementing your position sizing process with historical behavioral data.
Control your position sizing with real data. Access app.forextracker.com.br.