With a $10,000 account, 1% risk, 50 pip stop, and $1/pip value:

2 mini lots. $100 risk / (50 pips × $1) = 2 mini lots.

During a drawdown period, you should:

Reduce position size. Reducing position size during drawdowns protects capital and allows recovery.

Position Sizing

Calculating the right trade size

Position sizing determines how many units/lots to trade based on your risk tolerance. It is the bridge between your stop-loss and your risk percentage.

Formula: Position Size = (Account Risk $) / (Stop Loss in Pips × Pip Value)

Example: - Account: $10,000 - Risk per trade: 1% = $100 - Stop loss: 50 pips - Pip value (EUR/USD mini lot): $1/pip - Position Size: $100 / (50 × $1) = 2 mini lots

Risk percentages: - Conservative: 0.5% per trade - Standard: 1% per trade - Aggressive: 2% per trade (maximum recommended)

Never risk more than 2% of your account on a single trade. Even professional traders typically risk 0.5-1%.

Pro tip: Use ScaleEdge's built-in position size calculator in the Tools section.

Pro tip: During drawdowns, reduce position size to 0.5% to preserve capital.

Common mistake: Using the same lot size for every trade regardless of stop distance. Better: Calculate position size for each trade based on your stop-loss distance.

Common mistake: Risking 5-10% per trade to "make back losses". Better: Stick to 1-2% risk. Recovery from large losses requires even larger gains..

Key takeaways

Size based on risk percentage, not lot size
Never risk more than 2% per trade
Formula: Account Risk / (SL pips × Pip Value)
Adjust size for each trade based on stop distance

Quiz

With a $10,000 account, 1% risk, 50 pip stop, and $1/pip value: Answer: 2 mini lots. $100 risk / (50 pips × $1) = 2 mini lots.
During a drawdown period, you should: Answer: Reduce position size. Reducing position size during drawdowns protects capital and allows recovery.

Educational content, not financial advice.