https://kudo.com/_next/static/chunks/1222.325c89a83f4866ac.js

1!function(){try{var e="undefined"!=typeof window?window:"undefined"!=typeof global?global:"undefined"!=typeof globalThis?globalThis:"undefined"!=typeof self?self:{},t=(new e.Error).stack;t&&(e._sentryDebugIds=e._sentryDebugIds||{},e._sentryDebugIds[t]="f312a5a9-caa3-4a02-82c4-5c52dfd79e79",e._sentryDebugIdIdentifier="sentry-dbid-f312a5a9-caa3-4a02-82c4-5c52dfd79e79")}catch(e){}}();"use strict";(self.webpackChunk_N_E=self.webpackChunk_N_E||[]).push([[1222],{81222:e=>{e.exports=JSON.parse('{"seo":{"title":"Position Sizing Explained | Kudo Academy","description":"Learn how position sizing works in forex: choose a lot size so a stop-loss being hit costs only the amount you planned to risk. A free Kudo Academy lesson."},"title":"Position sizing","intro":"Position sizing is how you decide the size of a trade before you place it. Rather than choosing a lot size by feel, you work backwards from a single figure: the amount you are willing to lose if the trade reaches its stop-loss. Done well, a losing trade costs what you planned, and no more.","blocks":[{"type":"heading","text":"What position sizing decides"},{"type":"paragraph","text":"The goal is to pick a lot size so that, if price reaches your stop-loss, the loss equals the amount you set aside to risk on that trade. Three numbers control this, and they are tied together: the cash you will risk, the distance to your stop in pips, and the value of each pip, which is set by the lot size you choose."},{"type":"definition-list","items":[{"term":"The risk amount","definition":"the fixed sum you decide you can lose on the trade, chosen before you look at any lot sizes."},{"term":"The stop distance","definition":"how far your stop-loss sits from your entry, measured in pips."},{"term":"The pip value","definition":"what one pip of movement is worth, which depends on lot size. As an illustration, on a pair quoted in your account currency, one pip is worth about 10 units per standard lot (100,000 units), 1 unit per mini lot (10,000), and 0.10 per micro lot (1,000)."}]},{"type":"callout","text":"The three numbers fit one relationship: risk amount equals stop distance in pips multiplied by pip value. Fix the risk you are comfortable with, measure the stop distance, and the pip value, and therefore the lot size, is what you solve for."},{"type":"heading","text":"Why a wider stop means a smaller position"},{"type":"paragraph","text":"Because the risk amount is fixed, stretching the stop further from entry forces each pip to be worth less. Suppose, as an illustration, you will risk 50 units with a 25-pip stop: each pip can be worth 2 units, so you pick the lot size closest to that pip value. Move the same 50 units of risk to a 50-pip stop and each pip can be worth only 1 unit, so the position is about half the size."},{"type":"heading","text":"See the numbers on live prices"},{"type":"paragraph","text":"The calculator below does this arithmetic for you on live prices. Enter the amount you would risk and a stop distance in pips, and it works out the pip value and the lot size that keep the two in balance, so you can watch the size shift as the stop widens or narrows."}],"quiz":[{"question":"In position sizing, what fixes the lot size you end up choosing?","options":["The size of your last winning trade","The risk amount and the stop distance, which together decide the pip value you need","The leverage on your account, on its own","The spread between the bid and the ask"],"answer":1,"explanation":"The lot size falls out of the risk amount and the stop distance once you solve for the pip value that keeps them in balance."},{"question":"You keep your risk amount the same but move your stop-loss further from entry. What happens to the position size?","options":["It gets smaller, because each pip must be worth less to keep the loss the same","It gets larger, because a wider stop needs more exposure","It stays the same, because the risk amount has not changed","It changes only if the leverage ratio changes"],"answer":0,"explanation":"With risk fixed, a wider stop means a lower pip value, and a lower pi

1p value means a smaller lot."},{"question":"Of the three linked inputs, which one is set by the lot size you pick?","options":["The risk amount","The stop distance in pips","The spread","The pip value"],"answer":3,"explanation":"Pip value is a direct result of lot size, while the risk amount and stop distance are chosen first."}]}')}}]);