Lots and pips

4 min · 6 steps

1. Step 1 · Lots and pips

   In MT5, size is counted in lots and the stop in pips.

   The risk is the same: $5 000 deposit, 1% risk. That is $50, your 1R on any trade.

   $5 000deposit×1%risk=$501R

2. Step 2 · Formula

   Loss at the stop = lots × pips × pip value.

   We find the lots from the risk: divide $50 by the pips to the stop and the pip value.

   0.125lots×40pips to the stop×$10pip value=$50loss at the stop

   Assumption of the example: a pip is worth $10 per standard lot, as for pairs like EUR/USD and GBP/USD.

3. Step 3 · Two stops

   A wider stop means a smaller lot, and the loss is the same.

   EUR/USD, 40-pip stop: 0.125 lots. GBP/USD, 90-pip stop: 0.056 lots; the loss at the stop is the same, $50.

   Your broker sells lots in steps. Round down so the risk does not grow.

4. Step 4 · Work it out

   How many lots should you take with this stop?

   Example account. The risk and the pip value are known; find the size.

   • Deposit$5 000
   • Risk per trade1%
   • Stop25 pips
   • Pip value per lot$10

   Practice on the chart

   This one is a calculation task: pick an answer from the options and the lesson checks it by calculation.

   Open the taskNo sign-up needed. To keep your progress, sign in at the end of the lesson.

5. Step 5 · Gold and indices

   Gold has a different pip value, so don't eyeball it.

   For gold and indices the pip value is set by each broker. Find it in MT5: right-click the symbol, then “Specification”.

   The lesson's numbers hold only for the pairs in the example. For gold, your broker states the pip value.

6. Step 6 · Rule

   I size my lots before entry.

   to the checklist

   I size my lots before entry

   A checklist item before entry. It is not checked automatically; it's your own mark.