# How to Use a Position Size Calculator

> Proper position sizing is the secret to trading longevity. Learn how to use a position size calculator for every trade.

**Tags:** position-sizing, risk-calculator, risk-management, beginners
**URL:** https://traderjournal.app/risk-calculators/how-to-use-a-position-size-calculator

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# How to Use a Position Size Calculator

Many retail traders enter trades using a fixed lot size (e.g., always trading 0.1 lots). This is a major mistake. Because stop loss distances vary from trade to trade, using a fixed lot size means your cash risk is constantly fluctuating.

To manage your risk, you must calculate a custom position size for every setup using a position size calculator.

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## The Math Behind Position Sizing

To calculate the correct position size, you need four variables:

1. **Account Balance:** Your current trading capital.
2. **Risk Percentage:** The percentage of capital you want to risk (typically 1% or 2%).
3. **Stop Loss Distance:** The distance from your entry price to your stop loss in pips.
4. **Pip Value:** The value of one pip for the asset you are trading.

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## Using a Position Size Calculator

Instead of doing the math manually during active market hours, use a calculator:

- Input your account balance and risk percentage to find your dollar risk budget.
- Input your stop loss in pips.
- The calculator will output the exact lot size to use.

This process ensures that if your trade hits its stop loss, you lose exactly your budgeted amount (e.g., 100 dollars), regardless of how wide or tight the stop loss was.

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## Tracking Compliance

Use your trading journal to verify that your actual loss size matches your planned risk budget. If your journal shows large discrepancies, your position-sizing process needs adjustment.

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Trader Journal for MT4 and MT5 helps you monitor your actual trade outcomes, ensuring your risk management remains consistent.

Download it today at android.traderjournal.app or ios.traderjournal.app.