Position Sizing Formula Every Scalper Should Memorize

[Fairman]

This is the one formula that should be second nature, calculated before every single entry, not just the "big" ones.

Position Size = (Account Risk % × Account Balance) ÷ (Stop-Loss Distance in Pips × Pip Value)

Break it down like this. Decide your risk percentage — say 1%. Multiply that by your account balance to get your dollar risk for the trade. Then divide that dollar amount by your stop-loss distance in pips multiplied by the pip value for your position. What comes out the other end is your correct lot size for that specific trade, with that specific stop.

Why does this matter so much for scalpers specifically? Because stop distances change from trade to trade — a tight range-bound scalp might have a 4-pip stop, while a breakout scalp might need 12 pips. If you're using the same lot size regardless of stop distance, you're accidentally risking wildly different amounts on different trades, even though your intention was consistency.

Traders who eyeball their lot size — "eh, I'll just do 0.5 lots, feels about right" — are the same traders who look back at a losing week and can't explain why one trade cost them 5x more than another. Do the math every time. It takes fifteen seconds and it's the difference between controlled risk and accidental catastrophe.