A position-size calculator converts a chosen monetary risk and an invalidation distance into the quantity that can be traded. It does not decide whether a setup is valid or what percentage of an account should be risked. Those decisions must be made before the calculation.
Calculate position size
The calculator uses two steps:
- Risk amount = account equity × risk percentage ÷ 100.
- Position units = risk amount ÷ expected loss per unit at the invalidation price.
Use loss per unit, not the chart distance alone
The monetary loss represented by one price unit depends on the instrument, contract size, quote currency and account currency. For shares it may be the entry-to-stop difference per share. For futures, options, leveraged FX or contracts for difference, tick value, contract specifications, conversion and gap risk can change the result.
If your platform expresses risk in pips or points, first convert that distance into money per unit or per contract. Never treat a pip count as a currency amount without the applicable value.
Input checklist
| Input | Meaning | Verify |
|---|---|---|
| Account equity | Capital basis used for the decision | Whether open profit or loss is included |
| Risk percentage | Owner-selected maximum planned loss as a share of equity | Consistency with the trading plan and portfolio exposure |
| Invalidation price | Price that shows the trade thesis is no longer acceptable | It comes from the setup, not from the desired size |
| Loss per unit | Money lost for one unit if the stop fills as assumed | Contract value, currency conversion and expected execution |
Worked example
If equity is 10,000 account-currency units and the selected risk is 0.50%, the planned risk amount is 50. If the expected loss is 1 account-currency unit for each position unit, the calculated size is 50 units. If the expected loss per unit doubles, the position size halves.
This arithmetic assumes execution at the planned invalidation price. Gaps, slippage, fees and liquidity can make the realized loss larger. A prudent process may round down to a permitted tradable increment and keep a buffer for those uncertainties.
Portfolio exposure can require a smaller size
Individual-trade risk is not the whole account risk. Several positions can share the same currency, sector, index or macro driver. Before using the calculated quantity, check aggregate and correlated exposure through portfolio risk and the broader risk-management process.
Common errors
- Choosing the position size first and moving the stop to make it fit.
- Using balance or buying power as if it were acceptable loss capacity.
- Ignoring commissions, spread, slippage, gaps and currency conversion.
- Rounding up beyond the risk limit.
- Applying one contract-value assumption to a different instrument.
- Assuming a small percentage makes an invalid setup valid.
What this result does—and does not—say
The result is an exposure calculation under the inputs supplied. It is not a forecast, a recommendation, or a guarantee that a stop will execute at its requested price. Use Position Sizing to define the decision logic and Trade Management for the wider lifecycle.
Explore the other MFXG tools when the task moves from sizing to expectancy, drawdown or review.