Position sizing decides how much you buy or sell on a given trade. It's the least glamorous part of trading and, by a wide margin, the most important. Most blown accounts are a sizing problem, not a strategy problem.
The core idea: risk a fixed percentage
Professionals don't think "how many lots?" They think "how much am I willing to lose if this is wrong?" — usually a small, fixed slice of the account, commonly 0.5% to 2% per trade.
Risking the same small percentage every time means:
- No single loss can hurt you badly.
- A string of losses (which will happen) won't end your account.
- Your results come from your edge over many trades, not one big bet.
How to size a trade
Three inputs:
- Account risk — e.g. 1% of a $10,000 account = $100.
- Stop distance — how far your stop sits from entry (in pips or points).
- Value per pip/point — what each unit of movement is worth.
Position size = risk ÷ (stop distance × value per unit). The position-size calculator does this instantly, and the pip-value tool supplies the per-pip figure for Forex.
The mistake to avoid
Sizing by "what feels right" or by the profit you want. That inverts the logic — you end up risking more on setups you like, which is exactly when overconfidence hurts most. Let the stop and your fixed risk decide the size, every time.
Strategy gets the attention. Position sizing keeps you in the game long enough for the strategy to matter.
Education only — not financial advice.