Position size in forex is measured in lots. One standard lot is 100,000 units of the base currency; a mini lot is 10,000; a micro lot is 1,000. Most modern platforms let you trade fractions, like 0.37 lots.
What each size costs per pip
For USD-quoted pairs, remember three numbers: standard ≈ $10 per pip, mini ≈ $1, micro ≈ $0.10. A 30-pip stop therefore risks roughly $300, $30, or $3 respectively. This is why micro lots exist: they let small accounts take real trades with survivable risk.
Choosing your size, backwards
The correct lot size is an output, not an input. Formula: risk amount ÷ (stop distance in pips × pip value per lot). Example: $500 account, 1% risk = $5; stop 25 pips; $5 ÷ (25 × $10) = 0.02 lots. The number feels tiny, and it is exactly why that account survives to grow.
Common mistakes
- Trading one mini lot on a $100 account "because the profit is too small otherwise". That's 10× proper risk.
- Keeping the same lot size as stop distances vary: your dollar risk then swings wildly trade to trade.
- Increasing size after losses to recover faster, the classic path to a margin call, covered in Revenge Trading.
Size like an actuary, and the market's randomness becomes something you outlast rather than something that outlasts you.
Education only, not financial advice. Trading carries risk of loss; never trade money you cannot afford to lose.
