How do I calculate position size from my stop loss? Worked examples

For a linear position before costs: units = chosen cash risk ÷ (stop distance × cash value per unit of price movement). This estimates planned loss at an assumed entry and stop fill. It does not guarantee a maximum loss or select a suitable risk budget for you.

What assumptions belong with the formula?

Specify the account and quote currencies, contract size, linear or nonlinear payoff, stop trigger, fill price and costs. A stop trigger is not a guaranteed execution price. Gaps, slippage, changing conversion rates, liquidation and funding can change the result. Stop-order and close-based exits must be modelled separately.

For a cost-aware linear example, let B be the cash risk budget, F fixed round-trip cost, d stop distance, v cash value per unit per price point, and k assumed variable round-trip cost per unit:

Units = (B − F) ÷ (d × v + k), provided B exceeds F.

It is still an assumed model. Round down to an allowed quantity, then recheck planned loss, minimum notional, available cash and margin. Rounding down limits the modelled amount; it does not cap actual loss.

Example 1: SOL/USDT with a USDT risk budget

Hypothetical values, not a historical trade: budget 10 USDT, entry 165, stop fill 162.50, one SOL per unit, no costs. Stop distance is 2.50 USDT per SOL:

• Units = 10 ÷ 2.50 = 4 SOL.
• Position value = 4 × 165 = 660 USDT.
• Exact stop fill: 4 × 2.50 = 10 USDT planned loss.

If assumed variable costs are 0.05 USDT per SOL and fixed costs are zero, units = 10 ÷ (2.50 + 0.05) ≈ 3.9216 SOL before rounding. A worse fill can exceed that budget. USDT and USD are different currencies; convert explicitly for a USD account instead of silently assuming parity.

Example 2: conditional EUR/USD lots

Assume a USD account, a linear contract of 100,000 EUR per lot and a pip of 0.0001 USD per EUR. One pip per lot is 100,000 × 0.0001 = 10 USD. With a chosen 10 USD budget and a 20-pip stop:

Lots = 10 ÷ (20 × 10) = 0.05 lot, before costs and quantity constraints.

A different contract or account currency needs a different conversion. This is arithmetic under stated specifications, not a claim about every broker.

Example 3: conditional gold contract

Assume a broker contract of 100 ounces per lot, with a 5 USD-per-ounce stop distance and a 10 USD budget. Lots = 10 ÷ (5 × 100) = 0.02, before costs. A minimum order larger than 0.02 would make that modelled budget infeasible; do not round up to fit.

This conditional broker example is separate from the app’s GC=F gold futures history displayed as XAU/USD. The app does not provide a spot/CFD feed or establish broker lot, margin or sizing specifications. See the data methodology.

What about leverage?

For an unchanged linear quantity and identical fills, price P/L is unchanged by the margin fraction alone. But leverage can make larger exposure possible and introduce liquidation before a planned exit; funding and margin rules also matter. A stop-distance calculation is not a complete leveraged-risk model.

What can I practise in the app?

Price Action Trading Simulator supports placing entry, stop and target in manual historical replay, with a configurable simulated fee in R and saved sessions. It has no broker connection or real-money trading. It is not a broker contract or margin calculator. Setup is free to view; starting a backtest needs Pro.

For a self-check, choose a paper risk budget, state the assumptions and calculate units outside the app before replaying a decision. Compare your calculation with the assumed exit and costs in a journal.

Source and scope: this is educational material by the Price Action Trading Simulator development team. Price/account examples are hypothetical unless identified as a historical observation; exact fills and omitted costs are assumptions, not guarantees. Our case-data methodology explains the historical sources, selection and limits.