Position Sizing Strategies
Master position sizing to optimize your trade sizes and manage risk effectively across all market conditions.
Understanding Lot Sizes
Forex positions are measured in lots. A standard lot is 100,000 units, a mini lot is 10,000 units, and a micro lot is 1,000 units. Choosing the right lot size is crucial for proper risk management.
Fixed Percentage Position Sizing
Risk a fixed percentage of your account on each trade, typically 1-2%. This method automatically adjusts position sizes as your account grows or shrinks.
Volatility-Based Sizing
Adjust position sizes based on market volatility using ATR (Average True Range). In volatile markets, use smaller positions. In calm markets, you can increase size slightly.
The Kelly Criterion
The Kelly formula calculates the mathematically optimal position size based on your win rate and average win/loss ratio. Most traders use a fraction of the Kelly suggestion (half or quarter Kelly).
Scaling In and Out
Consider splitting your position into multiple entries or exits. This can improve your average entry price and reduce timing risk.
Related Calculators
Forex Position Size Calculator
Calculate precise forex position size based on risk, account balance, and stop loss.
Lot Size Converter
Convert forex lot sizes into units, micro, mini, and standard lots instantly.
Forex Pip Value Calculator
Calculate pip value instantly for any forex pair and lot size.
Kelly Criterion Calculator
Calculate optimal position size using the Kelly Criterion for forex trading.
ATR Position Size Calculator
Calculate position size based on ATR volatility for dynamic forex risk management.