Define the loss scenario first
Position sizing connects a proposed exit distance to a money amount. CME Group's educational material describes the relationship between stop placement, account risk and position size. The same arithmetic can inform a forex practice worksheet, but contract specifications and execution conditions must come from the actual instrument.
CME Group: proper position size
CME Group: position and risk management
An illustrative calculation
Assume a demo account with 2,000 dollars of equity and a hypothetical planned risk budget of 10 dollars. That is 0.5 percent of the example account, not a recommended percentage. Assume a 20-pip distance between entry and the intended stop and a value of 10 dollars per pip for one standard lot of the chosen instrument. One lot would represent 200 dollars of price risk at that distance.
Solve for the size
Divide the 10-dollar budget by 200 dollars of risk per lot. The result is 0.05 lot before costs. If the provider's minimum size or step does not permit that amount, do not silently round upward. Rework the plan or skip the simulated trade. Confirm that the assumed pip value is expressed in the account currency.
The neat answer is not the final answer
The worksheet omits slippage, commissions and any other costs not already incorporated into its entry-and-exit assumptions. If you reserve two dollars for such costs, only eight dollars remain in this particular price-risk calculation. Eight divided by 200 is 0.04 lot. A reservation is still an estimate; it cannot guarantee a maximum loss.
Watch combined exposure
A correct calculation for one position does not describe the whole account. Several positions may respond to the same currency or event. Write down the risk scenario for the portfolio as well as each order. Treat multiple trades expressing a similar idea as related decisions rather than independent opportunities.
Make the worksheet repeatable
Record equity, budget, entry, intended exit, distance, pip value, cost assumptions and permitted size increment. Recalculate when one input changes. Keeping the calculation attached to the trade makes a later review much more useful than a note saying only that the position felt small.
Sources and further reading
CME Group: proper position size
CME Group: position and risk management
Educational material, not a recommendation to trade. Examples are hypothetical. Leveraged products can produce substantial losses. Source links provide context and do not imply an endorsement of ELITE FX HUB.