How to calculate which lot size to use

As mentioned several times before, we risk 1% of our total trading capital per transaction. In simple terms, we risk 1 egg out of the 100 that we have in the basket in an attempt to get more eggs.

However, even though the average price mark where we place our Stop Loss is 30-60 pips away from the entry price, SL levels set differ from one trade to another, and different currency pairs have various differences in pricing (major pairs have small differences for the most part, while minor and cross-pairs have big gaps in pricing).

This article will demonstrate 3 random scenarios and illustrate which lot sizing is needed to be used based on the Stop Loss set and the percentage of the total capital risked while taking into account the size of the trading account. All numbers are imaginary in order to diversify the visualisation of the portrayed examples and give a better understanding of the case.

Enjoy the idea and don't forget to drop your questions in the comment box below!