Position Sizing by Risk Percentage and Stop-Loss Distance

Summary

The document describes a position-size calculator that uses a trader’s chosen percentage risk and stop-loss distance to determine lot size. The stop can be specified as a fixed number of points or as a multiple of Average True Range, linking the size of a position to the distance at which the trade would be exited if the market moves against it.

The indicator works in points, with ten points corresponding to one pip, and is presented for use across currency pairs, indices, commodities, and stocks on the MetaTrader 5 platform. Chart examples are named for EURUSD and the US500 index. The document does not provide the calculation formula, assumptions about account currency or contract values, or performance evidence. Users would need to check how the tool handles instrument specifications and verify that its suggested size matches their intended risk.

Key ideas

• The calculator derives lot size from a percentage risk limit and the distance to the stop loss.
• The stop-loss distance can be fixed in points or based on an Average True Range ratio.
• The indicator uses a point convention in which ten points equal one pip.
• It is described for currency pairs, indices, commodities, and stocks on MetaTrader 5.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.