Glossary · Prop-firm trading
Position size
The volume of a trade, chosen so that the stop loss costs the intended risk per trade and no more.
Risk money divided by what one unit of the instrument loses across the stop distance. In lots for forex and metals: a standard lot of a USD-quoted pair moves ten dollars a pip, so a 25-pip stop at 1,000 of risk is four lots. Floored to the broker's lot step rather than rounded, because rounding up risks more than the budget.
Worked example
Risk 1,000 on a EURUSD trade with a 25-pip stop: a standard lot moves 10 a pip, so the stop costs 250 a lot and the size is 4.00 lots. With a 33-pip stop the exact answer is 3.03 lots; floored to the 0.01 step it is 3.03, risking 999.90. Rounding up to 3.04 would risk 1,003.20.
- Also called
- lot size, volume