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Risk warningLeveraged products such as CFDs are complex and carry a high risk of losing money rapidly. Only trade with money you can afford to lose.

Lesson 04 · Core · 8 min

Position sizing

The single most important number on the ticket is not the price. It is the size.

Market

Drag the stop and the target on the ladder. The position size changes so a stopped-out trade always costs exactly $100.00.
1.16420ENTRY1.17049TARGET · +2.4R1.16158STOP · −1R

Position size

lots

38,176 units · margin $1,481.48 at 1:30

At risk (1R)
$100.00
Potential reward
$240.00
Risk : reward
1 : 2.40
Break-even win rate
29.4%

Ten losses in a row costs9.6%

Keep risk small and the losing streaks every strategy has stay survivable.

Interactive figure · try it

Risk a fixed fraction

Most professional risk management starts with one rule: risk a small, fixed percentage of the account on each trade, often between 0.5% and 2%. On a $10,000 account at 1%, every trade risks $100, no matter the market.

The formula

Position size = money at risk ÷ (stop distance × value per point). If you risk $100 and your stop is 25 pips away on a pair where one standard lot is worth $10 per pip, the size is 100 ÷ (25 × 10) = 0.4 lots.

Notice that a wider stop means a smaller position. The stop goes where the trade idea is proven wrong; the size adjusts to fit your risk, never the other way round.

Why it keeps you in the game

Losing streaks happen to every strategy. At 1% risk, ten losses in a row costs about 9.6% of the account. At 10% risk, the same streak costs about 65%, and you need to almost triple the remaining balance to get back.

Key takeaways

  • Risk 0.5–2% per trade
  • Size = risk ÷ (stop distance × point value)
  • Stops decide size, not the reverse
  • Small risk survives losing streaks