What it means
Position sizing in forex means choosing the lot size that makes your stop distance equal your planned risk.
In practice
Lots turn a risk figure into an order size. You decide how much money to risk and where the stop goes, then pick the lot size at which that stop distance costs exactly that amount.
On most pairs quoted in dollars, a standard lot is worth about $10 a pip, a mini lot $1 and a micro lot $0.10. So a 20-pip stop on a mini lot risks about $20.
What to watch for
Pip value changes when the quote currency is not your account currency, as with yen pairs or crosses, so one lot does not always mean the same risk. Let a position size calculator do the conversion.