Position sizing

Professionals decide how much they are willing to lose before they think about how much they can make. Fix a per-trade risk — say 1% of the account — and then calculate the position size that keeps the loss at exactly that amount if your stop is hit.

Position size = (account equity × risk per trade) ÷ (distance from entry to stop). If you have $10,000, risk 1% ($100), and your stop is 5% away, your position is $100 ÷ 0.05 = $2,000. The wider the stop, the smaller the position — automatically.

Even a 60%-win strategy will string together losers. Risking 1% means a rare 10-loss streak costs about 10% — recoverable. Risking 10% per trade turns the same streak into account-ending damage. Small, consistent risk is what lets an edge play out.