Position size

### It is an output, never a choice Position size reconciles two things you decide separately. First, how much money you are willing to lose on this trade. Second, how far away the stop has to sit for the idea to be given a fair test. Those two are set by your rules and by the chart, not by each other. Lot size is simply the number that makes them agree. **(account x risk%) / (stop pips x pip value) = lots** $10,000 account, 1% risk, so $100 at stake. Structure puts your stop 30 pips away on a pair worth $10 per pip per standard lot. $100 / (30 x $10) = 0.33 lots. Now the same account, the same 1%, but this setup's protected structure sits further off and the stop needs 60 pips. $100 / (60 x $10) = 0.17 lots. The trade did not get worse. Your size halved because your stop doubled. That inverse relationship is the entire mechanism, and eyeballing the lot size is exactly what breaks it. ### Pip value is not always $10 This is where real money gets lost to arithmetic rather than to the market. CMC Markets' lot-size reference puts a standard lot at 100,000 units, a mini at 10,000 and a micro at 1,000, with pip values on USD-quoted pairs of $10, $1 and $0.10 per pip. That $10 only holds while USD is the *quote* currency, so EURUSD, GBPUSD, AUDUSD. - When USD is the base currency (USDJPY, USDCHF) or neither currency is USD (EURGBP), CMC notes the pip value has to be converted through the current exchange rate. It drifts as price moves. It is not a clean $10. - On a JPY pair a pip is 0.01, not 0.0001. Carry the wrong decimal into the formula and your size is out by a factor of one hundred. - On metals, indices and crypto CFDs the instrument's minimum increment is not a forex pip at all. A calculator still set to FX conventions will hand you a lot size that bears no relation to the risk you actually intended, and you will not find out until the stop is hit. ### The habit that actually protects you Size on the real instrument, with a calculator, before you enter. Not from memory, not from "0.5 worked last time." Because your stop is anchored to protected structure and has to cover it by 2 pips, your stop distance is different on almost every setup. Which means your lot size should be different on almost every setup. If the same number is going into the box every time, you are not managing risk. You are repeating a habit and calling it a system.