The basic calculation
First choose a hypothetical maximum loss amount. Divide that amount by the estimated loss per unit between entry and stop. For products quoted in a different currency, convert the result into the account currency.
Example with illustrative numbers
If an account is worth 10,000 units of currency and the example risk budget is 0.5%, the planned loss budget is 50 units. If each unit would lose 2 units at the stop, the theoretical size is 25 units before costs and execution uncertainty. This is arithmetic, not a recommended risk level.
Check contract details
For FX, confirm lot size, pip value and quote currency. For CFDs, check contract value and point value. For crypto derivatives, check contract denomination, multiplier, margin mode and liquidation mechanics.
Account for real execution
Spread, commissions, slippage, gaps and conversion rates can make actual loss exceed the estimate. Stop orders are not guarantees of execution price, and leveraged products may have additional liquidation rules.
Record and verify
Use the broker’s official contract specifications or calculator, then verify with a small demo calculation. Keep the formula, assumptions and date because specifications can change.
Before placing the order
Does the quantity match the stop distance? Is the currency conversion correct? Are fees included? Is margin sufficient without approaching liquidation? Is the total loss acceptable? If any input is unknown, do not guess.
Educational information only. This is not individualized investment, legal or tax advice. Trading leveraged products can cause substantial losses. Verify current terms with official sources.