Most traders focus on entry timing. Professionals focus on risk per trade. That’s the difference.
🧠 Same Setup, Different Outcome
Two traders take the same trade. Both enter at the same price. Both use the same stop.
🔸️Trader A risks 20% of his account.
🔹️Trader B risks 2%.
The trade loses.
🔸️Trader A is emotionally shaken.
🔹️Trader B moves to the next setup.
Same analysis. Different position size. Different future.
📉 The Math of Survival
🔹️Lose 10% → need 11% to recover
🔹️Lose 25% → need 33%
🔹️Lose 50% → need 100%
Big losses don’t come from being wrong. They come from being oversized.
🛡️ The Professional Rule
• Risk 1–2% per trade
• Define invalidation before entry
• Never increase size emotionally
Your goal isn’t to win every trade. It’s to survive long enough for your edge to play out.
📐 Pro Tip (The Missing Link)
Calculate your position size based on the distance to your stop-loss, not the dollar amount you feel like risking.
Example:
If you risk 1% of a $10,000 account → $100 max loss.
If your stop is 5% away from entry → position size should be $2,000.
🔸️Not random.
🔸️Not emotional.
🔸️Mathematical.
That’s how you bridge the gap between why and how.
💡 The Truth
Good sizing can save a bad entry. Bad sizing can destroy a good one. The market rewards discipline not boldness.
What’s your average risk per trade?
#PositionSizing #RiskManagement #TradingPsychology #TradeSmart #CapitalPreservation