Sizing for big swings

On Volatility 75, position size matters more than almost anything else. Ordinary-looking trades can carry a lot of risk.

The formula is the same

Position size = Risk amount / (Stop distance x Value of one point per lot)

A worked example

These numbers show the maths. They are not a trade idea, and contract details vary, so check them on your platform.

• Demo balance: $1,000
• Risk per trade: 1%, which is $10
• Stop distance: 500 points
• Value of one point: $1 per lot

Position size = 10 / (500 x 1) = 0.02 lots

Check the minimum lot

Each instrument has a minimum lot size. Work out what that minimum risks with your stop. If it is more than your limit, your account is too small for that trade, so skip it.

Do not tighten your stop to make the numbers work. That only makes it more likely you will be stopped out by normal movement.

Keep the 3:1 rule

With a 500 point stop, your target must be at least 1,500 points away. Remember to allow for the spread, which can be significant on synthetic indices.

Key point

Use the calculator every time. Copying a lot size from a forex or gold trade could put far more money at risk than you intended.