Find the right position size for a trade based on your account risk and stop-loss distance.
Risk amount = Account balance × Risk %. Lot size = Risk amount ÷ (Stop-loss in pips × Pip value per lot).
Educational tool only — not investment advice. Markets involve risk; past performance and illustrative math don't guarantee future results.
A standard lot in forex equals 100,000 units of the base currency, a mini lot is 10,000 units, and a micro lot is 1,000 units — each step down is exactly one-tenth of the size above it, which is what lets a trader scale a position up or down in precise, predictable increments. Lot size directly sets the cash value of every pip of movement: on a USD-quoted pair, one pip is worth roughly $10 on a standard lot, $1 on a mini lot, and $0.10 on a micro lot — so the same 20-pip stop-loss represents a $200 risk on a standard lot but only $20 on a mini lot, with everything else about the trade identical.
The industry-standard way to choose lot size works backward from risk tolerance rather than forward from account size: Lot Size = (Account Balance × Risk %) ÷ (Stop-Loss in Pips × Pip Value). A $10,000 account risking 2% on a trade with a 20-pip stop and $10 pip value works out to exactly 1.0 standard lots — change any input (a wider stop, a smaller account, a more conservative risk %) and the correct lot size changes with it. This is also why account size and lot size should generally track together: standard lots tend to suit accounts above roughly $25,000, while mini lots fit better in the $2,500-$25,000 range when applying a conservative 1-2% risk-per-trade rule — trading standard lots on a small account routes far too much risk into each single trade.
A standard lot is 100,000 units of the base currency, a mini lot is 10,000 units (one-tenth of standard), and a micro lot is 1,000 units (one-tenth of mini). Each smaller lot size proportionally reduces the pip value and therefore the cash risk of the same price move.
Lot Size = (Account Balance × Risk %) ÷ (Stop-Loss in Pips × Pip Value). For example, a $10,000 account risking 2% with a 20-pip stop and $10-per-pip value (standard lot on a USD-quoted pair) works out to 1.0 standard lots.
Pip value is fixed at roughly $10 per standard lot only when USD is the quote currency, as in EUR/USD or GBP/USD. When USD is the base currency (USD/JPY, USD/CHF) or on cross pairs not involving USD directly, pip value shifts with the current exchange rate and needs to be recalculated.
Smaller accounts generally fit better with mini or micro lots rather than standard lots. A common guideline is that standard lots suit accounts above roughly $25,000, mini lots work well for $2,500-$25,000 accounts applying a conservative 1-2% risk-per-trade rule, and micro lots let even very small accounts trade with meaningful risk control.