Risk 1% Per Trade: How to Calculate Position Size and Lots for Gold and Forex
Lot size should not be a guess. Work it out in three steps: how much you can lose on the trade, the stop distance, and the value per move. This guide walks through two examples, gold and EUR/USD.
Many traders guess their lot size: bigger on a good day, then doubling up after a few losses to win it back. Professionals do the opposite: decide the most you will lose on the trade first, then calculate the lot size.
Step 1: decide the maximum loss
A common rule is to risk at most 1% of the account per trade, or 0.5% to be more conservative.
- On a 5000 dollar account, 1% is 50 dollars
- After 10 losses in a row, roughly 90% of the account is still there, so you can recover
Step 2: set the stop on the chart and measure the distance
The stop level comes from the chart, for example below support. Measure the distance from entry to stop.
Step 3: convert to lots
Lots = money at risk ÷ (stop distance × value per unit of movement)
Example 1: gold
On most platforms 1 standard lot of gold is 100 ounces, so a 1 dollar move is worth 100 dollars per lot.
- Account 5000 dollars, risk 50 dollars
- Stop distance 8 dollars
- Loss per lot = 8 × 100 = 800 dollars
- Lots = 50 ÷ 800 = 0.0625, round down to 0.06 lots
- Check: 0.06 × 8 × 100 = 48 dollars, within the 50 dollar limit
Example 2: EUR/USD
For 1 standard lot of EUR/USD, a 1 pip move (0.0001) is worth about 10 dollars.
- Account 5000 dollars, risk 50 dollars
- Stop distance 25 pips
- Loss per lot = 25 × 10 = 250 dollars
- Lots = 50 ÷ 250 = 0.2 lots
Contract specs can differ between platforms, so check yours before trading.
Why calculate it this way?
- Wide stop, smaller size; tight stop, bigger size, so every trade carries the same risk
- One big loss cannot wreck the whole plan
- Over time, results depend on the method, not on luck
Common mistakes
- Rounding 0.0625 up to 0.07: always round down, never up
- Increasing size after losses to win it back: the fastest way to blow an account
- Ignoring the spread: spreads widen around data releases, so the real loss can be a bit larger
To set your stop using today's key levels, see the gold analysis page or the EUR/USD analysis page. For where to place the stop, see where to put your stop loss. Download the Borearis app to set price alerts.
Borearis Research Team · For information only, not investment advice. Trading involves risk.
