Boot Camp Day 39: Calculating Lot Size

Main Ideas / Lessons

• The video explains position sizing, specifically how to calculate lot size so you control how much you risk on each trade.
• It compares three strategies for sizing positions:
  • Use a set loss size (the speaker’s preferred approach).
  • Calculate lot size every trade (the method taught in detail).
  • Full port (explicitly discouraged—said to never be done).

Step-by-Step Methodology: Calculating Lot Size (Live Calculations)

1) Use a Lot Size Calculator App (Phone)

• Find a lot size calculator app (the speaker recommends “stenu”).
• Typical inputs shown on the app:
  • Account balance
  • Risk amount / risk percent
  • Stop loss in Pips
• Example workflow:
  • Account balance: $1,000
  • Risk: 1%
  • Stop loss: 30 pips
  • Select the instrument (Forex pairs are supported; the speaker notes it may not include S&P 500)
  • Press Calculate → the app returns the exact lot size to risk that percent given the stop loss.

2) Use a Lot Size Calculator Website (Browser)

• The speaker prefers a website because it supports S&P 500 in addition to Forex.
• Inputs are conceptually the same:
  • Account balance
  • Stop loss (in Pips/points, depending on the instrument’s convention)
  • Risk percent
• Example workflow (from subtitles):
  • Balance: $1,000
  • Stop loss: 30 pips
  • Risk: 1%
  • Output example mentioned: 0.03 lots
  • Note: lot size can be constrained by broker decimal precision (they reference two-decimal limits in this context).

If you don’t know the stop loss “in pips”:

• Use MetaTrader 4/5 (MT4/MT5) position tools—as you drag/set the stop-loss, MT shows a value for stop loss in pips.

3) Special Handling for S&P 500 (Points vs Pips)

• The speaker states S&P uses points, not pips.
• To handle that correctly, switch the calculator to use Stop Loss in Pips (per the site/MT settings described), so it outputs the correct lot size.
• Example inputs mentioned:
  • Balance: $100,000
  • Stop loss: 1807 (noted as “correct” since S&P often uses points)
• The calculator then outputs lot size numbers (subtitles show example outputs such as 4,700 and 789, though formatting is unclear).

4) Confirm Contract Size / Units per Lot (Critical)

• For offshore brokers, the speaker claims typical units per lot:
  • Often 100 units per lot
  • But for some prop firms / others it may be 10 units per lot
• How to check in MetaTrader:
  1. Open MetaTrader
  2. Click the symbol (example given: SPX)
  3. Choose Details
  4. Look for Contract size
     • Example shown: Contract size = 10
• Warning:
  • Don’t assume units per lot—brokers can vary contract specifications, and it can break your lot sizing math.

5) Set-Lot-Size Method (Speaker’s Preferred Approach)

• Instead of recalculating every trade, the speaker sets a lot size based on an expected/typical stop loss.
• Reasoning:
  • If the actual stop loss differs from the “set” amount, risk scales roughly proportionally.

Example given for S&P:

• The speaker says their stop loss is often around 4 to 7 points (average feel).
• They choose a minimum/typical stop loss (example: 400 pips).
• Calculate once → resulting set lot size example: 25 lots.

Risk behavior explanation:

• If price hits the stop within the typical range, risk is about the intended ~1%.
• If the stop is larger (e.g., 2x), the speaker explains the risk becomes 2%, 3%, etc.

Key lesson:

• The set stop loss (and thus lot size) should be instrument-specific, based on volatility/volume.
• The speaker suggests traders may only be trading one pair at a time during learning.

Risk Scaling Method (Advanced / Tricky; Discouraged)

• The speaker describes a tiered approach, but explicitly says viewers should not copy it until they are profitable and have market confidence:

  • Normal risk = baseline set lot size (intended 1% risk)
  • D-risk = 50% of normal risk
    • Used for high impact news / bank holiday conditions (example: Fourth of July)
  • Confident lot size = 2x normal
    • Intended to increase risk potential (math described unclearly in subtitles due to tiredness/hesitation)

Strong warning from the speaker:

• Don’t use “confident” sizing because traders lack proof they can trade confidently.
• They recommend normal or de-risk instead.

Sources / Speakers Featured

• Primary speaker: Unnamed YouTube host/instructor (referred to in subtitles as “this dude”).
• Mentioned third-party tool:
  • “stenu” (lot size calculator app; stated as not sponsored/ad).
• Software mentioned:
  • MetaTrader (MT4/MT5) (no external source beyond the platform).