The arithmetic that turns a risk percentage and a stop distance into an actual position size. This free lesson covers: The formula, A worked example, Work it out, The stop drives the size, never the reverse, A setup that needs room, Value per point varies — check yours, Name it, Two different setups, What happens without this step, Put it together.
Risk Before Anything Else · Learn · Step 1 of 10
Position size = (account × risk %) ÷ (stop distance in points × value per point).
Three inputs. Your risk percentage is fixed by you. The stop distance comes from the chart. The value per point comes from your broker and the instrument — and it is the one people most often get wrong.
Going deeper
US30 is quoted in points, and the value of a point differs substantially depending on how you access it: CFDs, spread bets and the CME's YM futures contract all price movement differently. Sizing from the wrong figure is the most consequential arithmetic error available to a new trader.
The formula itself is unchanged across instruments. Only the value-per-point input differs, which is why it is worth confirming from your own account rather than a tutorial.
It depends on the instrument and broker. A CFD lot is often around $1 per point, YM futures are $5 per point, and spread bets use whatever stake you set. Confirm yours before sizing.
Then that setup is too large for the account at your risk level. Skipping it costs nothing; forcing it means exceeding your planned risk.
No. Leverage affects how much margin is tied up. Your risk is set entirely by stop distance multiplied by position size.