Free Forex Calculator: Position Size

& Pip Value

Pretty simple concept: you're trading one currency against another. Buy EUR/USD and you're betting euros go up relative to dollars. If the euro strengthens, you profit. If not, you don't.

The market runs 24/5, following the sun from Sydney to Tokyo to London to New York. Best trading happens when sessions overlap—London/New York from 8am to noon EST has the tightest spreads and most action.

Daily volume is north of $7 trillion. That's not a typo. Makes the stock market look tiny. For major pairs, you can get in and out of positions instantly. Exotics and off-hours? Wider spreads and more slippage.

Ask any profitable trader what matters most. They won't talk about indicators or entry signals. They'll talk about risk management. And position sizing is the core of it.

Here's the brutal math: Risk 2% per trade and a 10-trade losing streak costs you about 18%. Painful but survivable. Risk 10% per trade and those same 10 losses destroy 65% of your capital. Now you need 186% gains just to get back to even. The math doesn't care about your feelings.

Every trade should risk the same dollar amount—not the same lot size. Wide stop means smaller position. Tight stop means larger position. Dollar risk stays constant. This isn't sexy but it keeps you in the game.

Leverage lets you punch above your weight. At 100:1, your $1,000 controls $100,000 worth of currency. A 1% favorable move doubles your money. A 1% adverse move wipes you out.

Brokers offer 2:1 up to 500:1 depending on where they're regulated. But what's available and what's smart are two very different questions. Most pros use 3:1 to 10:1 regardless of what's offered. High leverage is a loaded gun. Useful in the right hands, catastrophic in the wrong ones.

Margin is just collateral—money held while your trade's open. You get it back when you close (assuming your account survives). When equity falls below required margin, that's a margin call. Understand this before it happens to you, not after.

A pip is the smallest standard price movement. Fourth decimal for most pairs, second decimal for yen. That part's simple.

What trips people up is pip value. EUR/USD with a standard lot and USD account? Clean $10 per pip. But GBP/JPY? That pip is denominated in yen, so you need the current USD/JPY rate to figure out what it's worth in dollars. Account in EUR? Another conversion.

This is why calculators exist. The math isn't rocket science, but getting it right every time while you're watching charts and making decisions? Harder than it sounds. Just use the calculator.