How the lot size is worked out
Professional traders decide the money they can lose before they choose the lot size. The calculator does it in three steps:
- Money at risk = balance × risk %. With $1,000 and 1 % that is $10.
- Loss per 1 lot = stop distance × contract size × the value of the quote currency in dollars.
- Lot size = money at risk ÷ loss per 1 lot, rounded down to your broker's lot step (usually 0.01), so you never risk more than you planned.
Example: gold (XAUUSD)
Balance $1,000, risk 1 % ($10). You buy gold at 4,000 with a stop at 3,995, so the stop distance is $5. One lot of gold is 100 ounces, so 1 lot loses $5 × 100 = $500 at the stop. Lot size = $10 ÷ $500 = 0.02 lots. If gold hits your stop you lose about $10, not your account.
Example: EUR/USD
Balance $2,000, risk 1 % ($20), stop 25 pips. One standard lot of EUR/USD is worth $10 per pip, so 25 pips lose $250 per lot. Lot size = $20 ÷ $250 = 0.08 lots.
Pips or price distance?
For currency pairs a pip is the fourth decimal (0.0001), or the second for yen pairs (0.01). For gold, silver, indices and crypto brokers count "pips" differently, so it is safer to type the stop as a price distance: entry minus stop. If your stop is at 3,995 and entry at 4,000, type 5.
Why 1 % (or less)?
With 1 % risk, ten losing trades in a row cost about 10 % of the account, which you can recover from. With 10 % risk the same losing streak can end the account. Many traders use 0.5 %–2 %. Prop firm traders often use less because of daily loss limits.
Questions
What lot size should I use for $100?
With $100 and 1 % risk you can lose $1 per trade. On gold with a $5 stop that is 0.002 lots, smaller than most brokers allow (0.01). Then the honest answer is: skip the trade, or only take setups with a much closer stop that still makes sense.
How much is 0.01 lot of gold per $1 move?
0.01 lot is 1 ounce, so a $1 move in gold is about $1 profit or loss. 1 full lot (100 ounces) moves $100 per $1.
Does leverage change the lot size?
No. Leverage only changes the margin your broker holds. The risk comes from the lot size and the stop distance. Use the margin calculator to see the margin.
Why is my broker's number a little different?
Contract sizes, pip definitions and the account currency differ between brokers. Open Contract details and use the values from your broker's symbol specification.
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