Position sizing when stops vary

[Amanhasnoname]

Fixed lot sizes sound simple, but they produce uneven risk. A 2 pip stop and a 6 pip stop with the same lots risk very different amounts.

Sizing from risk fixes this. Decide the amount to risk, divide by the stop distance in pips times the pip value, and the result is the lot size. A wider stop gives a smaller position, and a tighter stop gives a larger one.

That keeps each trade's potential loss consistent, so the equity curve reflects the strategy's edge and not randomness in sizing.

For scalpers, the calculation has to be fast. A small spreadsheet or a position size calculator built into the platform makes it automatic. Some platforms allow risk-based order entry directly.

Remember to include the spread in the stop distance when computing, since the real distance to exit is a bit longer.

Also check the rounding. Lot sizes come in steps, so the actual risk can differ a little from the target.

How is position size computed on each trade, and is the calculation automated?