Stop losses, lot sizes and position sizing | Forex Factory

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Stop losses, lot sizes and position sizing

  • #1
  • First Post: Feb 28, 2018 6:01pm Feb 28, 2018 6:01pm
I just cant get my head around position sizing, as I'm on a £1000 account i should be trading Micro lots, (1000 units/0.01 ect),
-So if i was to have a maximum risk of 1% does that mean my stop loss should be £10?
-I currently use the BabyPips position calculator is this alright or should i do it myself?
-My trading style is a more of a swing trader/long term (typically 1D/1W charts so my stop losses seem to be quite high, in the hundreds is this alright?
Thanks its one of the few things i ant get my head about!
  • #2
  • Mar 1, 2018 1:58pm Mar 1, 2018 1:58pm
Quoting oliverfxldn
I just cant get my head around position sizing, as I'm on a £1000 account i should be trading Micro lots, (1000 units/0.01 ect), -So if i was to have a maximum risk of 1% does that mean my stop loss should be £10?
Yes, if you are willing to lose 1%, it means 10 of the 1000 pounds. A micro-lot equals to 0.1 currency units per pip for a 4-digit-quoted currency. I.e., if you have a GBP cross (i.e. EURGBP): this means a stop-loss of 10 pounds divided by 0.1 pounds per pip (10/0.1 or 10*10), equal 100 pips (stop-loss).
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  • #3
  • Mar 2, 2018 1:04am Mar 2, 2018 1:04am
Quoting oliverfxldn
I just cant get my head around position sizing, as I'm on a £1000 account i should be trading Micro lots, (1000 units/0.01 ect), -So if i was to have a maximum risk of 1% does that mean my stop loss should be £10? -I currently use the BabyPips position calculator is this alright or should i do it myself? -My trading style is a more of a swing trader/long term (typically 1D/1W charts so my stop losses seem to be quite high, in the hundreds is this alright? Thanks its one of the few things i ant get my head about!
Yes in 1% risk, 10£ is the maximum stop loss. I use my own calculator that's I don't have any idea about Babypips calculator. Yes you are in right direction. For newbie higher time frame is very good. By the way I also trade on D1. But the problem is for D1 nit every time you will find entry with 100 pips stop loss. In that case you can increase your risk a little bit. But don't increase the lot size.
  • #4
  • Mar 2, 2018 1:50am Mar 2, 2018 1:50am
Quoting oliverfxldn
I just cant get my head around position sizing, as I'm on a £1000 account i should be trading Micro lots, (1000 units/0.01 ect), -So if i was to have a maximum risk of 1% does that mean my stop loss should be £10? -I currently use the BabyPips position calculator is this alright or should i do it myself? -My trading style is a more of a swing trader/long term (typically 1D/1W charts so my stop losses seem to be quite high, in the hundreds is this alright? Thanks its one of the few things i ant get my head about!
Hi, oliverfxldn
The combination of stop placement and position size are the key blocks of your risk management. You must do this well if you hope to survive any length of time.

First, determine where the stop is on the trade you are considering. This should be the point where the trade is most likely wrong, based on your analysis. If you put the stop closer you risk closing out prematurely what could be a good trade. If you put it further away you are risking extra for no extra likely gain. You should not just be sticking on an arbitrary stop level - though any stop is better than none at all!

Once you have the stop you can determine position size. Let's say your stop is 100pts away for your swing trade and the risk on your contract is £1 per point of market move. You decide your risk level is 1% of the account on the trade, i.e. £10 in cash terms on a £1000 account. For 100pts of market move to be £10 cash your size thus needs to be £0.10 per point. You are ready to go! I would do this myself rather than use a calculator, it will help you understand better what and why you are doing it.

Do trade small and only risk really small amounts of your account while you are learning. You are almost certainly going to be rubbish and lose money but don't worry about that. It will be trivial amounts in real cash terms, your focus should be on good analysis, good execution of trades and good risk management. The profits will come as you accumulate experience and understanding but the risk control, discipline and good habits are your foundations that you simply must acquire first.
Best of luck!
  • #5
  • Mar 2, 2018 5:10am Mar 2, 2018 5:10am
Quoting oliverfxldn
I just cant get my head around position sizing, as I'm on a £1000 account i should be trading Micro lots, (1000 units/0.01 ect), -So if i was to have a maximum risk of 1% does that mean my stop loss should be £10? -I currently use the BabyPips position calculator is this alright or should i do it myself? -My trading style is a more of a swing trader/long term (typically 1D/1W charts so my stop losses seem to be quite high, in the hundreds is this alright? Thanks its one of the few things i ant get my head about!
Hi oliverfxldn,

You ask a good and reasonable questions, but I still cant get how you plan to win if you just think abount loses and how you can be a swing trader with 0.01 lots...
I mean if you do your analysis at D or W and have only £1000, you'll always hit SL. Or you'll be waiting too long for profit trading only with 0.01 lot.
I don't want confuse you or tell you how things should be, this is your strategy, you have the right and should work on it by yourself.
I'm just trying to figure out if you're doing this for earnings or are you just try trading forex? Thanks and green pips to you.

Cheers, Matt
  • #6
  • Mar 2, 2018 9:39am Mar 2, 2018 9:39am
Quoting Matt098
{quote}I'm just trying to figure out if you're doing this for earnings or are you just try trading forex? Thanks and green pips to you. Cheers, Matt
Hi thanks for replying the trading itself would not be for earnings, ideally I would like to gain a small percentage per week/month and compound it, not for earnings hence the small starting capital.
As for the small lots, I read somewhere that those with a capital of around £1000 should only trade with microlots (0.01) so thats what i followed.
Thanks!
  • #7
  • Mar 2, 2018 6:35pm Mar 2, 2018 6:35pm
Discipline is very vital if you talk about stop loss, lot size and position sizing. But if you're really a conservative type of traders and don't want to loss much $$$$ in your account then you do simple math. If I'll be the one in your case I will do like this to maximize potential results and minimize risk.

Example:

Capital: $1,000.00
Leverage: 100 to 500
Lot Size: 0.03
Pip Value: $0.30
Account Pip Capacity: 3,333.33 pips
Available Position: 111 position to Lose or Win
Account Survival / Fatality: 5.55 Months, on Daily Basis Target
Time Frame: Used 1 hour to project the Daily market movement because it provides average daily range of 80 to 100 pips daily in EURUSD markets, same also with other currencies.
P/L Ratio: 1:2
Initial P/L Ratio: 1.1.50, protect floating profit
=========================
Stop Loss: 30 pips
Take Profit: 60 pips
Initial Floating Profit Protection: 45 pips
==========================

To control the risk:

Consider the Market Cycle because opening and overlap closing may contribute some PIPS factor to your projected target.

1. Opening Asian Market (Less Active )
2. Opening European Market (Medium Active)
3. Opening US Markets ( Most Active)

Apply your strategy: Simple support and resistance will do..

Do simple Math:

3 Losses + 2 Wins = Break-even , in a week or 5 business days. this will be your basis in 1:1.45 ratio

Best time to trade: Opening or Overlap of that markets because it contributes PIPS of the whole structure of your targets.
If your using 1 Hour then trade after the next hour candle..

Hope this will help you buddy and stay profitable
  • #8
  • Mar 13, 2018 9:44am Mar 13, 2018 9:44am
Quoting oliverfxldn
{quote} Hi thanks for replying the trading itself would not be for earnings, ideally I would like to gain a small percentage per week/month and compound it, not for earnings hence the small starting capital. As for the small lots, I read somewhere that those with a capital of around £1000 should only trade with microlots (0.01) so thats what i followed. Thanks!
I see now. If you have leverage of 1:500, so normal for trading is 0.1 lot, 0.01 lot too small. IMHO
  • #9
  • Jan 27, 2025 6:49am Jan 27, 2025 6:49am
[Stoploss Question] EUR/USD 1 HOUR chart trading. Buy limit and sell limit. Taking into account the common expansions of the 1 HOUR candle of the price when testing relevant levels: How about a 20 pip stop loss? How many SL pips do you insert? Thank you.
  • #10
  • Jun 16, 2025 11:20pm Jun 16, 2025 11:20pm
With a £1000 account, 1% risk = £10 per trade. For micro lots (0.01), adjust stop-loss distance so £10 = 1% risk. BabyPips’ calculator works, but manual checks ensure accuracy. Large stops (100+ pips) are fine for swing trading—just reduce lot size accordingly. Always prioritize risk management over position size.
  • #11
  • Jun 19, 2025 3:33pm Jun 19, 2025 3:33pm
also experienced that tight SL with $100k account forced huge lots and poor margin usage. As someone scaling up, I learned to increase SL slightly and reduce % risk per trade, giving me space to manage multiple positions without margin stress
  • #12
  • Jun 23, 2025 11:47pm Jun 23, 2025 11:47pm
Quoting pizd0s
also experienced that tight SL with $100k account forced huge lots and poor margin usage. As someone scaling up, I learned to increase SL slightly and reduce % risk per trade, giving me space to manage multiple positions without margin stress
Great insight! Tight stops with large accounts can indeed force oversized positions and margin strain. Increasing SL width while lowering risk % (e.g., 0.5%-1%) improves flexibility and reduces emotional trading. Scaling up requires patience—focus on consistency over aggression. Thanks for sharing this lesson; it’s gold for traders transitioning to bigger capital!
  • #13
  • Last Post: Jul 14, 2025 3:48am Jul 14, 2025 3:48am
Quote
Scaling up requires patience—focus on consistency over aggression.


Scaling up a trade is easy... but letting it go after a larger loss is more difficult. You should always have a good, conscious profit and loss calculation.
I've found that scaling up can quickly lead to confusing trading.
Sure, you can minimize losses this way, but you should also learn to take losses.
That's been my experience in the time I've been trading.
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