FTMO Position Sizing: The Formula That Decides Whether You Pass

The single math equation that decides whether you pass

Most prop-firm advice is qualitative — "stay disciplined," "respect the rules," "don't overtrade." The advice is not wrong, but it does not change behavior, because the trader still has to decide in the moment what "disciplined" means. Position sizing is the place where qualitative advice becomes a math problem with a single right answer per trade. Run the math, place the trade. Ignore the math, become a statistic.

The formula is short. It is also the variable that, more than any other, decides whether a trader will pass an FTMO Challenge or breach the daily-loss limit on a normal-volatility day.

The formula

Position size in lots = (Account size × Risk percent) divided by (Stop-loss distance in pips × Pip value per lot).

For a $100,000 account risking 1% per trade with a 20-pip stop and a $10-per-pip pip value: (100,000 × 0.01) / (20 × 10) = 1,000 / 200 = 5 lots. The five lots is the answer. There is no second number to consider. The discipline of running this calculation for every single trade is what separates traders who pass from traders who guess at sizing.

If you'd rather not run the math by hand, the position size calculator runs it instantly with whatever inputs you put in.

Why each variable matters

Account size

The number you actually have to work with — for an FTMO Challenge, this is the account size you bought (typically $10K, $25K, $50K, $100K, or $200K). Use the starting balance, not the current balance. Sizing off the current balance during drawdown means risking less when you're behind, which sounds prudent but actually slows recovery. Sizing off the starting balance keeps per-trade risk constant in absolute terms.

Risk percent

The portion of the account you are willing to lose if this single trade hits its stop. The healthy range is narrow:

• 0.5% in the first month of any new account, regardless of confidence. The strategy hasn't had enough live trades to confirm it behaves like the backtest.
• 1% after consistent results across at least 30 live trades.
• 2% as an absolute ceiling. With FTMO's 5% daily-loss limit, three losing trades at 2% breach the daily limit. Two losers plus a small winner come within striking distance. The math leaves no room for a bad day.

Stop-loss distance

The distance in pips between your entry and your stop-loss order. This is determined by the strategy, not by the size you want to take. Setting the stop where you "wish" it would be — closer to entry to allow a bigger position — is the most common amateur move in trading. The stop goes where the strategy says, then the lots come out of the formula.

Pip value per lot

Most traders treat pip value as a constant ($10 per lot for major Forex pairs). It usually is for USD-denominated pairs and accounts. It varies for JPY-quoted pairs (slightly less), exotic pairs (varies widely), metals, indices, and crypto. The reliable move is to pull the actual pip value from your broker's contract specs before placing the trade. Many traders blow up their first XAUUSD trade because they assumed gold has the same pip value as EUR/USD. It does not.

What changes when you reframe sizing as a formula

The behavior changes in three ways that matter for the challenge.

1. Sizing stops being emotional. Confidence in a setup does not enter the equation. Either you are willing to lose 1% on this trade or you are not. If yes, the formula gives you the lots. If no, you don't take the trade. There is no"slightly bigger because I really like this one" version of the formula.
2. Drawdown becomes predictable. If you risk 1% per trade, ten consecutive losses (extremely unlikely with any real edge) cost you roughly 9.6% (compounding). FTMO's max-drawdown is 10%. Even an extraordinary losing streak does not end the account. At 2% per trade, five consecutive losses cost roughly 9.6% — same drawdown, half the streak length. The formula choice determines how unlucky you can be before the account ends.
3. Time-to-target becomes calculable. If your strategy has a 50% win-rate at 2R-average winners, your expected value per trade is 0.5R. With 1% risk per trade (1R = 1%), that is 0.5% expected per trade. To hit FTMO's 8% Challenge profit target, you need roughly 16 trades worth of expected value — allowing for variance, more like 25-40 trades. Now the question is no longer "how long does it take" but "how many trades does it take." See the timeline article for the longer version of that calculation.

Common sizing mistakes that breach FTMO rules

Sizing for the win, not the loss

Most amateurs size based on what the trade could make. "If this works, that's a 5R winner." Then they size to make the 5R meaningful. Professionals size based on what the trade could cost if the stop is hit. The cost is fixed by the formula. The win is whatever the strategy delivers.

Sizing the same on different instruments

A 0.5-lot position in EUR/USD is not the same risk as a 0.5-lot position in XAUUSD. Pip values differ, stop distances differ, and volatility differs. Each instrument needs its own pass through the formula. The calculator handles this by accepting per-instrument pip-value inputs.

Adjusting size mid-drawdown

After two losses, the temptation is to either size down (to protect) or size up (to recover). Both break the formula. The formula uses starting balance — it doesn't know about your recent results. Sticking to the formula through drawdown is what produces consistent expected-value capture. The traders who survive challenges do this. The ones who don't, don't.

Forgetting commissions and spreads

For a 5-lot position with a 1-pip spread, the spread cost is $50. That counts toward your risk budget. If your stop is 20 pips and the spread is 1 pip, your effective stop is 21 pips. Adjust the formula accordingly or accept that you're routinely risking 5% more than the formula says.

The position-size-calculator and how to use it

Bookmark the calculator. Default it with your FTMO account size, your locked risk percent (0.5%, 1%, or 2% — the value should be the same on every single trade), and the pip value for whichever instrument you trade most. Then for every setup, the only input that changes is the stop-loss distance. The output is the position size in lots.

Five seconds per trade. Better than a year of "staying disciplined" as advice.

The short version

• Lots = (Account × Risk%) / (Stop-pips × Pip-value-per-lot).
• Lock risk at 0.5% in month one, 1% after, 2% as the absolute ceiling.
• Use the free calculator for every trade until the formula is second nature.
• The formula is what makes "staying disciplined" a process instead of a hope.

Position sizing is one pillar of the architecture. The other four — edge validation, execution discipline, drawdown response, and psychological architecture — are in MB Capitals on the homepage. Past performance does not guarantee future results.

Sources

• FTMO, How it works — official daily-loss-limit (5%), maximum-loss-limit (10%), and Challenge profit-target (8%) values.
• The Risk%, Stop-pips, and Pip-value figures used in worked examples are illustrative inputs. The formula itself is the standard fixed-fractional position-sizing model used across the retail-trading literature.