Lesson D1 · Part D: Survival9 of 108 min
Risk per trade and position sizing
The single most important calculation in trading — work it out before every position.
§1Decide the loss first
Professionals decide how much they're willing to lose before they decide how much to buy. A common rule is to risk 0.5–2% of the account on any one trade.
With the risk amount and the stop distance known, the position size is simply arithmetic.
§2The formula
Position size (lots) = risk amount ÷ (stop distance in pips × pip value per lot).
Use the Position Size tool on the Workbench to run this in seconds — and notice how a wider stop forces a smaller position for the same risk.
01Account $5,000 · risk 1% = $50
02Stop: 25 pips · pip value $10 per lot
03Size = $50 ÷ (25 × $10) = 0.20 lots
remember this:
- Fix your risk in money before choosing a size.
- Size = risk ÷ (stop pips × pip value).
- Ten losses in a row at 1% risk still leaves ~90% of the account.
Checkpoint
Q1.Account $10,000, risk 1%, stop 50 pips on EUR/USD ($10/pip per lot). What size?
Q2.If you widen the stop while keeping the same risk, the position size should…