Risk management
February 17, 2019

Risk Management II

How to calculate lot sizes

Assumption is you have a $10 000 dollar account and you are risking 2% of your account per trade. In this case 2% of $10000 is $200.

we want to determine pip risk (difference between entry point and stop loss). For purposes of this demonstration we will use 50 pips.

Now determining your ideal position size

$ at Risk / (pip risk X pip value)

$200 / (50x$1)

4 Mini lots

One last example
Lets say you have a $100 account and risking 2% per trade. 2% of $100 is $2.

The pip risk is 20 pips. So determining the ideal position size.
$ at risk / (pip risk X pip value)

$2/ (20 x $0.10)

1 microlots

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