Position sizing connects your risk plan to the actual size of each trade. This page walks through the core ideas behind translating account risk, stop distance and contract value into a position size for Forex, Crypto and Binary markets.
Education only · Not trading adviceWorks together with Risk Management Foundations
Sizing concept overviewUse with your platform's own tools and calculators.
Approx. reading time: 8–10 minutes.
Why position size matters as much as direction
Choosing direction is one decision. Choosing size is another. Two traders can take the same entry but experience completely different outcomes because their position sizes are different.
Position sizing answers the question: "How big should this trade be, given my planned risk?"
It connects the amount you are prepared to lose with the distance to your stop or expiry.
It stops "random" trade sizes, where one trade quietly dominates your risk.
It helps you compare ideas on a common basis: risk, not just potential profit.
This page focuses on concepts. In practice you will usually use your broker's platform, ticket window or a dedicated calculator to apply them with real numbers.
The sizing triangle: risk, distance and value per unit
Most sizing approaches in leveraged markets use the same basic triangle:
1. Risk amount
How much you are prepared to lose on this idea, usually a small portion of the account value.
2. Distance to stop / expiry
The price distance between your entry and where the trade is considered wrong or complete.
3. Value per unit
How much you gain or lose per pip, point, unit or contract – defined by your broker and instrument.
Once these three pieces are known, position size can be calculated by combining them. Platforms often do this behind the scenes, but understanding the logic helps you avoid surprises.
Conceptual example: Forex sizing logic
In Forex, position size is often expressed as a number of lots. Behind the scenes, the logic connects your risk amount, the pip distance to the stop and the pip value per lot.
Concept flow
Define your risk amount for this trade.
Measure the distance from entry to stop in pips.
Use your broker's pip value per lot to connect pip distance with money risked.
Choose lot size so that a full stop-out roughly equals your planned risk.
The exact pip value depends on currency pair and account currency.
Why the numbers are just examples
Real calculations differ between brokers and platforms. Swap rates, tick sizes and contract specifications also matter. The point is not to memorise sample numbers, but to understand the structure of the decision.
Notes for Crypto and Binary structures
Crypto margin products
Many crypto products use contracts or units with their own tick values and minimum sizes. Volatility can be extreme, which makes distance-to-stop and risk amount especially important.
Always check notional exposure (how much underlying you effectively control), not just margin required.
Binary-style payoffs
Binary options often have a fixed payout and a fixed potential loss. In many cases the "position size" decision is simply how much you are willing to stake on the structure.
Here, risk per trade and number of trades in a series become more important than pip or tick distance.
Consistent sizing as a behaviour, not a perfect formula
Sizing is not about finding a magical percentage. It is about applying a consistent framework so that a series of trades behaves in line with your risk tolerance.
Decide a typical range of risk per trade that feels sustainable.
Use it as a ceiling – you can always choose less, but avoid "spikes" in risk without a clear reason.
Track whether you are actually following your own sizing rules.
Adjust slowly, based on experience and data, not on emotion after a single win or loss.
Many traders find it helpful to write their sizing logic as a short checklist or decision tree that they can revisit quickly before placing orders.
