Getting your lot size wrong is the single most avoidable reason funded accounts fail. Not bad strategy — bad position sizing. One oversized trade on a volatile day and you're done. This guide covers the exact formula professional prop traders use, with worked examples for forex, gold and indices.
The lot size formula
There is only one correct formula for risk-based lot sizing — whether you are on FTMO, FundedNext, The5ers, Funding Pips or any other funded account:
Where:
Risk Amount = Account Balance × Risk %
Pip Value = depends on the instrument (see table below)
That's it. Leverage doesn't appear in this formula — it affects margin requirements but not your position size. More on that below.
Step-by-step example — EUR/USD on FTMO
Account: $10,000 FTMO Challenge
Risk per trade: 1% = $100
Instrument: EUR/USD (pip value: $10 per standard lot)
Stop loss: 20 pips
Lot Size = $100 ÷ (20 × $10) = $100 ÷ $200 = 0.50 lots
Pip values by instrument
The most common mistake is using the wrong pip value. Here are the correct values for the instruments prop traders use most:
| Instrument | Pip Value (per std lot) | Notes |
|---|---|---|
| EUR/USD, GBP/USD, AUD/USD | $10.00 | Fixed for USD-quote pairs |
| USD/JPY, GBP/JPY | ~$6.70 | Varies with exchange rate |
| USD/CHF | ~$11.40 | Varies with exchange rate |
| Gold (XAUUSD) | $100.00 | 100 oz × $1/point = $100 |
| US30 / NAS100 | $1.00 per point | Confirm with your broker |
| GER40 / UK100 | $1.00 per point | EUR/GBP denominated — convert |
Does leverage change your lot size?
No. This confuses a lot of traders. A trader at The5ers (1:30 leverage) and FTMO (1:100 leverage) with identical accounts, risk percentages and stop losses get the exact same lot size from the formula.
What leverage changes is two things:
- Required margin per lot — at 1:30, one EUR/USD lot needs ~$3,333 margin. At 1:100 it's ~$1,000. Same position, very different margin requirement.
- Maximum lots your account can hold — higher leverage means more lots available, but you should never use anywhere near the maximum.
How much should you risk per trade?
Most successful prop traders use 0.5% to 1% during challenge phases. Here's why this matters:
| Risk per trade | Consecutive losses before 10% max DD | Verdict |
|---|---|---|
| 0.5% | 20 losses | Comfortable buffer |
| 1.0% | 10 losses | Standard, manageable |
| 2.0% | 5 losses | Risky for a challenge |
| 3.0% | 3 losses | One bad session = failed |
Gold (XAUUSD) lot size — where most calculators get it wrong
Gold is the instrument most traders miscalculate. One standard lot of gold is 100 troy ounces. At $3,200/oz, that's a $320,000 position — not $100,000 like a forex pair.
Account: $10,000 · Risk: 1% = $100 · Stop: 10 points
Pip value on gold: $100 per lot (100 oz × $1/point)
Lot Size = $100 ÷ (10 × $100) = 0.10 lots
Most generic calculators give you 1.00 lot here — 10× too large. That would risk $1,000, not $100.
Prop firm daily limits — the extra constraint
Beyond your own risk rules, every prop firm has a daily loss limit. FTMO and FundedNext cap it at 5% of your account balance. On a $10,000 account that's $500 per day across all trades, open and closed.
A good rule of thumb: never risk more than 30% of your daily limit on a single trade. On a $10,000 FTMO account with a $500 daily limit, that means no more than $150 per trade — roughly 1.5% risk.
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