trademagic guides
Forex position sizing, done properly
Entries get the attention; sizing decides who survives. One formula, applied to every trade without exception, is most of what separates systematic traders from statistics. Here it is, with a calculator.
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The formula
Fixed-fractional sizing risks the same fraction of equity on every trade, and derives the position from the stop distance rather than from conviction:
- Risk amount = equity x risk per trade. $10,000 at 1% risks $100.
- Position size = risk amount / (stop distance in pips x pip value per lot). A 32 pip stop on EURUSD at $10 per pip: $100 / (32 x $10) = 0.31 lots.
Notice what the formula requires: a stop known before entry. Every trademagic signal publishes entry, stop, and target, which makes it directly sizeable; a call without a stop (see our scam red flags) cannot even enter this arithmetic.
Position size calculator
Risk amount: $100.00
Position size: 0.31 lots
Educational tool, not financial advice. Pip value per standard lot is about $10 for USD-quoted majors like EURUSD; check your broker for JPY pairs and crosses.
Why this beats the alternatives
- Fixed lots ignore both your equity and the stop: the same 0.5 lots risks twice as much on a 60 pip stop as a 30 pip one. Risk should be constant, not lot count.
- Martingale (doubling after losses) converts a losing streak into a terminal event. Streaks are not anomalies; at any fixed win rate they are a certainty over enough trades.
- Feel sizes up exactly when confidence is highest, which is statistically when it deserves the most suspicion.
In code, so it never gets skipped
def lots(equity: float, risk_pct: float, stop_pips: float,
pip_value_per_lot: float = 10.0) -> float:
"""Fixed-fractional size: the same %% of equity at risk on every trade."""
risk_amount = equity * risk_pct / 100
return round(risk_amount / (stop_pips * pip_value_per_lot), 2)
# A live signal does the rest: entry 1.08420, sl 1.08100 -> 32 pips of risk.
# lots(10_000, 1.0, 32) -> 0.31The portfolio layer
Per-trade sizing is half the discipline; the other half caps the pile: a maximum number of concurrent positions, a per-pair cap, and awareness that correlated pairs (EURUSD and GBPUSD, for instance) can be one bet wearing two tickers. Systematic execution through a bot (our bot guide is the walkthrough) applies all of it without a moment of discretion, which is exactly how the models' certified statistics assume their signals are traded.
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Frequently asked questions
What percentage should I risk per trade?
Common systematic practice sits between 0.5% and 2%, chosen from the drawdown you can genuinely tolerate: at 1% per trade, ten straight losers cost about 10% of the account. Pick the number before the trade, apply it to every trade, and never raise it to win losses back. This is education, not financial advice.
Does trademagic size positions for me?
No, deliberately. Signals carry the stop distance and risk to reward; sizing depends on your equity and tolerance, so it stays your decision. That separation is also why we never need access to your account.
What is the pip value for JPY pairs?
For USD-quoted majors like EURUSD a pip on a standard lot is about $10. For JPY pairs a pip is 0.01 and its dollar value moves with USDJPY (roughly $6.8 per lot at 147). When in doubt, your broker's contract specification is authoritative.
Should I size bigger on high-confidence signals?
Only within a pre-committed, tested rule (for example scaling inside a 0.5% to 1.5% band by the model's stated confidence), never by feel. Fixed-fractional with equal risk per signal is the baseline that matches the models' published statistics.
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