GLOSSARY · POSITION SIZING
What is position size?
Position size is the lot quantity chosen so that the distance to your stop loss equals a predetermined fraction of your account, usually one to two percent.
What it means
The formula is short: risk amount divided by (stop distance times value per unit of movement). On gold that becomes account balance times risk percentage, divided by (stop in dollars times 100 times lots). Rearranged for lots, it gives you the only number in the ticket that is not a guess.
Why it matters
What the formula makes visible is that risk percentage and stop distance are joint, not independent. Widening the stop while keeping the risk percentage fixed necessarily shrinks the position; keeping the position and widening the stop increases the risk whether you intended it or not.
What this changes in practice
Two constraints break the formula in practice, and both are ignored by most calculators. The broker minimum lot puts a floor under position size, so on small accounts your real risk can exceed the configured percentage — and stops are not exact, so the modelled loss is a best case. The lot size calculator surfaces the first of those explicitly.
Related terms
- Lot sizeLot size is the quantity of an instrument traded in a single position, expressed as a multiple o…
- Risk per tradeRisk per trade is the fraction of account equity a single position is allowed to lose if its sto…
- Stop lossA stop loss is a resting order that closes a position once price moves a set distance against it…
- Micro lotA micro lot is one hundredth of a standard lot — 0.01 in the order ticket — and is the smallest …
Educational information only, not financial advice. Trading leveraged products carries substantial risk of loss. Last updated 2026-08-11.