How position size is calculated
The formula is simple: lot size = (account balance × risk %) ÷ (stop loss in pips × pip value per lot). With a $10,000 account risking 1% on a 20-pip stop at $10 per pip, that is $100 ÷ $200 = 0.50 lots. The stop placement comes from your analysis; the size comes from the math — never the other way around.
Why fixed-percent risk beats gut feel
Risking a fixed 0.5–2% per trade does two things gut-sizing cannot. First, it makes losing streaks survivable: at 1% risk, ten straight losses — which every strategy eventually produces — draws you down about 9.6%, not 50%. Second, it makes your statistics comparable: when every trade risks 1R, your journal can honestly tell you your average win is +1.8R and your average loss is −1R, and expectancy becomes a number instead of a feeling.
The mistake this calculator cannot catch
Calculating the right size and then not taking it. Size creep after a winning streak — 0.5 lots becomes 0.8 'because I am in rhythm' — is invisible day to day and obvious in a journal. Log your planned risk next to your actual risk on every trade, and the gap between them becomes a metric you can manage. That is exactly what Edgelog tracks automatically when your MT4/MT5 trades sync in: planned stops, actual sizes, and the R-multiples that result.
Want the full context on risk math? Read our profit factor guide and the forex journaling guide.