Risk management is the difference between trading and gambling. The professional sizes every position from the stop distance and a fixed risk fraction — typically 0.5% to 2% of account equity — never from conviction.
The formula is simple: position size = account risk ÷ (stop distance in pips × pip value). A tighter stop allows a larger position for the same risk; a wider stop forces a smaller one. The market, not the trader, sets the stop distance via structure.
Two rules protect the account over time: never move a stop away from price, and never average down a losing position. Both convert a planned, limited loss into an unplanned, unlimited one.
Use the position-size calculator on this site to internalise the math, then rehearse it on a demo until sizing is automatic.
This content is provided for educational purposes only and does not constitute investment advice. Trading leveraged products involves a high level of risk.