You have a $1,000 demo account and a hypothetical $5 risk budget for one trade. The chart gives you a 25-pip stop. The question is how many units to trade—not how much margin the platform will let you use.
This example uses a US dollar account and EUR/USD. It is an arithmetic exercise, not a recommended risk level or a live setup.
Work through the arithmetic
For EUR/USD, one standard lot is commonly 100,000 euros. A one-pip move of 0.0001 is therefore $10 per standard lot. Contract specifications can differ; check the instrument in your platform before using the calculation.
Lots = cash risk ÷ (stop distance in pips × pip value per standard lot).
Here that is $5 ÷ (25 × $10) = 0.02 lots, or 2,000 units of the base currency. At that size, a pip is worth $0.20. A 25-pip move against the position is $5 before commission, financing or a difference between the intended and actual fill.
A wider stop means a smaller position
Keep the same $5 budget and change only the stop distance. The maximum calculated size moves in the opposite direction.
| Stop distance | Calculated size | Risk before costs |
|---|---|---|
| 15 pips | 0.0333 lots | About $5 |
| 25 pips | 0.0200 lots | $5 |
| 50 pips | 0.0100 lots | $5 |
If the platform accepts steps of 0.01 lots, 0.0333 cannot be entered exactly. Rounding down to 0.03 risks $4.50 at a 15-pip stop before costs. Rounding up to 0.04 risks $6. Your order ticket needs the available size step, not just the calculator's answer.
Leave room for the actual bill
The simple formula assumes the stop distance correctly reflects the difference between your entry and exit prices. Buy and sell orders use different sides of the spread. Commission may be charged separately. A stop can also fill beyond its trigger during a gap or fast market.
If $5 is the whole planned loss budget, allocate part of it to estimated costs before calculating size. For example, using $4.50 for price movement leaves $0.50 as a cost allowance; it does not cap slippage. If the smallest available trade is still too large, the workable answer is to skip it or practise in a suitable demo account.
Check the account currency and the contract
The $10 pip value works here because USD is both the quote currency and the account currency. It is not a universal constant. A yen pair has a different pip convention. A cross quoted in another currency needs conversion into the account currency. Gold and index CFDs use their own contract sizes.
Before submitting an order, compare your calculation with the platform's cash value at the stop. Check entry, stop distance, units, commission and available margin. Margin answers whether you can open the position. Cash risk answers what a stop-out would cost under the assumptions you used.
References & further reading
Forex and CFD trading carries a risk of substantial loss. Examples are hypothetical; analysis is not a personal trading recommendation. Editorial standards · Report a correction.