et’s say you want to trade EUR/GBP, but your account is funded in USD.
You’re willing to risk just $100 USD on the trade—but here’s the catch: you’re not trading any dollars directly. You’re dealing with euros and pounds. So, how do you figure out your position size?
Position Sizing with Non-Account Currencies
In this lesson, we’ll walk you through how to calculate your position size when the currency pair you’re trading doesn’t match your account currency.
Scenario 1: Your Account Currency Matches the Counter Currency of the Conversion Pair
Example: USD account trading EUR/GBP
Newbie Ned is back home in the U.S., and he’s eyeing a trade on EUR/GBP with a 200-pip stop.
Step 1: Calculate the Risk in USD
Ned wants to stick to his rule of risking no more than 1% of his $5,000 account, which equals $50.
To convert this to GBP (since EUR/GBP is quoted in pounds), we’ll need the GBP/USD exchange rate.
Step 2: Convert USD Risk to GBP
Let’s assume the exchange rate is GBP/USD = 1.7500.
Since his account is in USD, we need to invert that rate to convert to pounds:
Step 3: Convert GBP Risk to Value per Pip
Next, divide by the stop loss to find how much risk per pip:
Step 4: Calculate Position Size
Now, multiply by the unit-to-pip value ratio for EUR/GBP, where 10,000 units (1 mini lot) equals GBP 1 per pip:
✅ Ned should trade no more than 1,429 units to keep his risk within $50.
Scenario 2: Your Account Currency Matches the Base Currency of the Conversion Pair
Example: CHF account trading USD/JPY
Now Ned’s in Switzerland, snowboarding between trades. He opens an account with a local broker funded in CHF (Swiss francs).
He spots a setup on USD/JPY with a 100-pip stop, and he wants to risk 1% of his CHF 5,000 account, which is CHF 50.
Step 1: Calculate the Risk in CHF
Step 2: Convert CHF to JPY
Assume the exchange rate is CHF/JPY = 85.00:
Step 3: Convert JPY Risk to Value per Pip
Step 4: Calculate Position Size
Assuming 100 units of USD/JPY equals 1 pip worth JPY 1:
✅ Ned should trade no more than 4,250 units of USD/JPY to stay within his risk limit of CHF 50.
Boom! You’ve just tackled two more advanced position sizing examples.
It might seem tricky at first, but once you break it down, it’s as easy as baking a cake. 🍰
Want more? Stick around—we’re not done teaching you how to protect your account like a pro.