How to calculate lot size for forex, gold and indices, with examples
Choosing your lot size is the most important decision in every trade, and most new traders get it backwards. They pick a lot size first, then put the stop wherever it fits. Professionals do the opposite: they decide how much they're prepared to lose, place the stop where the trade idea is wrong, and let the lot size fall out of the maths.
The formula
Three numbers go in:
- Money at risk: a fixed percentage of your account. 0.5% to 1% while you're learning, never more than 2%. (More on choosing it in how much to risk per trade.)
- Stop distance: from your entry to where the idea is proven wrong, in pips (or points, or dollars for gold).
- Pip value per lot: what one pip is worth on one standard lot of that market, converted into your account currency. See pip value explained.
Four steps, every trade
- Work out the money at risk. Balance × risk %. On a £2,000 account at 1%, that's £20.
- Find the stop. Put it where the setup is wrong (beyond the sweep wick, beyond the pin bar's tail), then measure the distance.
- Work out what that stop costs on 1.00 lot. Stop distance × pip value per lot, in your account currency.
- Divide, and round down. Money at risk ÷ cost per lot = your lot size. Round down to the nearest 0.01, never up.
Pip values you need to know
| Market | 1 pip is | Value of 1 pip on 1 standard lot |
|---|---|---|
| EURUSD, GBPUSD, AUDUSD (quoted in dollars) | 0.0001 | $10, about £7.46 at 1.34 dollars to the pound |
| EURGBP (quoted in pounds) | 0.0001 | £10, no conversion needed on a pound account |
| JPY pairs (USDJPY, GBPJPY) | 0.01 | ¥1,000, about £4.98 with USDJPY at 150 and GBPUSD at 1.34 |
| Gold (XAUUSD) | Usually $0.10 (check your broker) | $10 per 0.10 move; $100 per $1 move (1 lot = 100 oz) |
| Indices (NAS100, US30, GER40) | 1 point | Set by your broker: often $1, $10 or $20 per point per lot. Check the specification |
Lot sizes scale simply: a mini lot (0.10) is a tenth of those values and a micro lot (0.01) a hundredth. For gold in particular, see how much 0.01 lot of gold is worth.
Worked example: EURUSD
1 pip on 1.00 lot = $10 = £7.46
25 pips × £7.46 = £186.57 per lot
£20 ÷ £186.57 = 0.107 → 0.10 lots
If the stop is hit: 25 × 0.10 × £7.46 = £18.66
Always round down, never up, so you never risk more than planned.
Worked example: gold (XAUUSD)
1.00 lot loses $100 per $1, so $600 for a $6 stop = £447.76
£20 ÷ £447.76 = 0.045 → 0.04 lots (risk £17.91)
Gold moves fast and needs wider stops than most forex pairs, so the same money at risk means a much smaller lot size. That's normal and correct.
Worked example: USDJPY
1 pip on 1.00 lot = ¥1,000 = $6.67 (at 150) = £4.98 (at 1.34)
30 pips × £4.98 = £149.25 per lot
£20 ÷ £149.25 = 0.134 → 0.13 lots (risk £19.40)
Because a JPY pip is worth less than a dollar pip, you can trade a slightly bigger size for the same stop. The value moves with the yen, so use today's rate (the calculator asks for it).
Worked example: NAS100 (and other indices)
Indices are where traders get caught out, because brokers set the contract size differently. Two brokers can both call it NAS100, and one lot can be worth $1 a point at one and $10 a point at the other. So step one is always to check (see the next section).
If 1.00 lot = $1 per point: 50 points = $50 = £37.31 per lot → £20 ÷ £37.31 = 0.536 → 0.53 lots (risk £19.78)
If 1.00 lot = $10 per point: 50 points = $500 = £373.13 per lot → 0.054 → 0.05 lots (risk £18.66)
Same trade, same risk, a tenfold difference in lot size. Getting this wrong is how a planned £20 loss becomes £200. There's more on this in NAS100 and US30 lot size explained.
Check your broker's numbers in MT4 or MT5
Every figure above assumes the standard contract: 100,000 units per forex lot and 100 ounces per gold lot. Most brokers use those, but not all. To check:
- In MetaTrader, open Market Watch (Ctrl+M).
- Right-click the symbol and choose Specification.
- Note the contract size, the tick size and the tick value.
With those three, the formula works for any market, including oil, indices and crypto:
This is exactly how the TTL indicators work out the lot size on your chart: they read the tick value from your broker, so it's always right for your account.
Why it matters so much
| Risk per trade | Account left after 10 losses in a row |
|---|---|
| 1% | 90.4% |
| 2% | 81.7% |
| 5% | 59.9%: you now need a 67% gain just to get back |
| 10% | 34.9% |
Ten losses in a row sounds unlikely, but even a decent strategy will have long losing runs over a few hundred trades (the odds are worked out in drawdown and losing streaks). At 1% risk you shrug it off. At 5% or 10% it's the end of the account.
Five common mistakes
- Confusing leverage with risk. Leverage decides how much margin is locked up. Your lot size and stop decide how much you can lose.
- Moving the stop to fit a lot size. The stop goes where the idea is wrong. Then you size the trade.
- Forgetting the currency. If your account is in pounds, convert dollar pip values to pounds.
- Using the same lot size every trade. A 10-pip stop and a 50-pip stop at the same lot size are completely different risks.
- Mixing up pips and points. On a 5-digit broker, MetaTrader measures in points, and 10 points make 1 pip. A “50” stop could be 50 pips or 5 pips depending on which you mean.
Measure every trade in R, automatically
The Trader's Ledger records your entry, stop and result, and shows your win rate and average R by setup and session. £19 one-time, with a free 49-page trading course that covers risk management in depth.
Get The Trader's LedgerOn MetaTrader, TTL Risk:Reward Pro lets you drag your stop and target on the chart and works out the lot size for the money you want to risk. Trading a funded account? Read position sizing for prop firm challenges first.
Frequently asked questions
How much should I risk per trade?
Most professionals risk 0.5% to 1% of their account per trade, and rarely more than 2%. Beginners should start at the low end.
What is a pip worth on gold?
On most brokers, 1 pip on XAUUSD is a $0.10 move, worth $10 on one standard lot (100 oz). A full $1 move is $100 per lot, or $1 on 0.01 lots. Brokers differ, so check your contract specification.
How do I calculate lot size for NAS100 or US30?
Find out what one point is worth on 1.00 lot at your broker (right-click the symbol in Market Watch, then Specification). Then lot size = money at risk ÷ (stop in points × value per point per lot). Brokers commonly use $1, $10 or $20 per point, so always check.
What lot size should I use on a £500 account?
Risking 1% means £5 a trade. With a 20-pip stop on EURUSD that's 0.03 lots. On gold, even the minimum 0.01 lot costs about £0.75 per $1 move, so any stop wider than about $6.70 risks more than 1%. Small accounts often have to choose between a smaller stop, a bigger risk percentage, or skipping the trade.
Does leverage change my lot size?
No. Leverage only changes how much margin your broker holds. Your risk is set by your lot size and stop distance.
Should I round lot sizes up or down?
Always down. Rounding up means risking more than you planned.
Educational content only, not financial advice. Trading carries a high level of risk and you can lose more than you expect. Examples use illustrative prices.