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Lots and position sizing: how big should my trade be?
Most beginners who blow up an account don’t pick bad trades — they pick trades that are too big. Position sizing is the fix.
What is a lot?
- Standard lot (1.00) = 100,000 units of the currency
- Mini lot (0.10) = 10,000 units
- Micro lot (0.01) = 1,000 units — the smallest size at most brokers
For gold, 1 lot is usually 100 ounces, so 0.01 lots is 1 ounce.
The position sizing formula
Lot size = (Account × Risk %) ÷ (Stop loss in pips × Pip value per lot)
Example: $2,000 account, risking 1% ($20), stop loss 25 pips on EUR/USD ($10 per pip per lot): 20 ÷ (25 × 10) = 0.08 lots.
Notice what happened: you decided how much you were willing to lose first, then let the math choose the size. That’s the professional way to do it.
Common mistakes
- Using the same lot size for every trade, even when the stop loss is wider.
- Increasing size to “win back” a loss.
- Forgetting that a CAD account needs a currency conversion.
Skip the arithmetic with our free lot size calculator.