Position sizing with the risk percentage method
The fixed fractional, or risk percentage, method is the most widely used way to size forex positions. You decide what share of your balance you are willing to lose on one trade, typically between 0.5% and 2%, and you set the position size so that a stop-out costs exactly that amount. As the balance grows or shrinks, the size adjusts with it.
This position size calculator applies that method to any forex pair, metal, index or CFD, in any account currency.
Why use a fixed risk percentage?
- Losses stay proportional. A run of losing trades reduces the account gradually instead of in large steps.
- Stops drive the size, not the other way round. You can place the stop where the chart says it belongs and let the size adapt.
- Results are comparable. If every trade risks 1%, wins and losses can be measured in "R", one unit of risk.
The method does not make a strategy profitable. It controls how fast an account can fall when trades go wrong.
The formula
Risk amount = Balance × Risk % ÷ 100
Position size = Risk amount ÷ (Stop loss in pips × Pip value of 1 lot)
Pip value of 1 lot is calculated in the pair's quote currency (100,000 units × pip size) and converted to your account currency. For JPY pairs the pip size is 0.01, so 1 lot is 1,000 JPY per pip.
Worked example: GBPJPY in a euro account
You have a €8,000 account and trade GBPJPY with a 45 pip stop. Assume USDJPY at 150 and 1 USD = 0.92 EUR.
Step 1 – Pip value of 1 lot in EUR
- 100,000 × 0.01 = 1,000 JPY per pip
- 1,000 JPY ÷ 150 = $6.667, × 0.92 = €6.13 per pip
Step 2 – Risk amount at 1%
- €8,000 × 1% = €80
Step 3 – Position size
- 80 ÷ (45 × 6.1333) = 0.2899 lots, rounded down to 0.28 lots
- Check: 0.28 × 45 × €6.1333 = €77.28 at risk, just under the €80 limit.
How the risk % changes the size
| Risk per trade | Risk amount | Exact lots | Rounded down |
|---|---|---|---|
| 0.5% | €40 | 0.1449 | 0.14 |
| 1% | €80 | 0.2899 | 0.28 |
| 2% | €160 | 0.5797 | 0.57 |
Doubling the risk percentage doubles the position size. Halving the stop distance would do the same, which is why a tight stop is not automatically a "safer" trade: it lets you trade larger for the same risk.
How to use this calculator
- Enter your account balance (or equity, if you prefer to size from equity) and account currency.
- Enter your risk per trade as a percentage.
- Choose the instrument.
- Enter the stop loss distance in pips, or the entry and stop prices.
- For pairs that need conversion, check the exchange rate used.
- Read the risk amount and position size, then round down to your broker's lot step.
Choosing a risk percentage
There is no universal correct figure, but many traders keep risk per trade between 0.5% and 2%. Consider:
- Losing streaks. At 2% per trade, ten losses in a row leave roughly 82% of the balance; at 5% per trade the same streak leaves about 60%. The drawdown calculator shows how much gain is then needed to recover.
- Correlated trades. Three trades on EURUSD, GBPUSD and AUDUSD all short the dollar behave like one larger trade. Count combined risk.
- Costs. Spread and commission add to the loss at your stop. With very tight stops, they can be a noticeable share of the risk.
Balance or equity?
Sizing from balance is simpler and steady. Sizing from equity reflects open profit or loss, so it shrinks your size when other positions are losing. Either works if you apply it consistently.
Related tools
Use the stop loss and take profit calculator to convert pip distances into exact prices, the margin calculator to make sure the position fits your free margin, and the risk reward calculator to check the trade's target against the risk you just sized.
Frequently asked questions
What is a good risk percentage per trade?
Many traders use 0.5% to 2%. Lower figures reduce the impact of losing streaks; higher figures speed up both gains and losses. Pick a figure you can keep through a run of ten or more losses.
Does the position size calculator include spread?
The core formula uses the stop distance you enter. If you want spread included, add it to your stop distance, for example a 45 pip stop plus a 2 pip spread becomes 47 pips.
Why is my position size smaller on JPY crosses in a euro account?
The pip value is converted from yen to euros, and the result depends on current rates. In the example above, one pip on 1 lot is about €6.13 rather than €10, so the same euro risk buys a different lot size than on EURUSD.
What if the calculated size is below 0.01 lots?
Your stop is too wide for the risk at this balance. Tighten the stop if the chart allows, choose a smaller instrument, or skip the trade.
Should I recalculate after every trade?
Yes. With a fixed percentage, the money at risk changes as your balance changes, so recalculate before each new position.
Closing note
The risk percentage method turns a vague sense of "how much to trade" into a repeatable rule. Decide the percentage, place the stop, and let the calculator give you the size.
Trading leveraged products carries a high risk of loss. Results are estimates; check your broker's contract specifications.