Position Sizing
Calculate the right trade size to protect your account
4 sections · 3 quiz questions · ~5 min read
The 1-2% Rule
Never risk more than 1-2% of your account on a single trade. With a $10,000 account and 2% risk, your maximum loss per trade is $200. This ensures no single trade can devastate your account.
Calculating Position Size
Position Size = (Account Risk $) ÷ (Stop Loss in Pips × Pip Value). If you risk $200 with a 40-pip stop on EUR/USD, you'd trade 0.5 standard lots ($200 ÷ 40 pips ÷ $10/pip = 0.5 lots).
Account Size Matters
A $500 account at 2% risk means only $10 per trade — you'll need micro lots. A $50,000 account at 1% allows $500 risk. Match your lot size to your account. Overleveraging small accounts is the #1 killer.
Consistency Is Key
Use the same risk percentage on every trade. Don't risk 1% on normal trades and 10% on "sure things." Consistent position sizing is what separates professionals from gamblers. Trust the math, not emotions.
Quick check
Did it stick?
Try to answer each one before you peek at the explanation.
1
With a $10,000 account and 2% risk rule, what is your max loss per trade?
2
It's acceptable to risk 10% on trades when you're very confident.
3
Position Size = Account Risk ÷ (Stop Loss × ?)