(Position Sizing = the secret to account survival)
Error number 1 among most traders:
They enter with a random trade size... then they blame the market.
Professionals do the opposite:
They first determine the acceptable loss... then they build the trade on it.
✅ Step 1: Determine the risk percentage
Professionals' rule:
Only 1% to 2% of capital in the trade
Example:
• Capital = 1000$
• Risk 2% = 20$ (this is the maximum you can afford to lose)
✅ Step 2: Determine where to set the stop loss
The stop loss is not a random number.
It is a logical level (support/resistance/trade idea).
Example:
• Entry at 100$
• Stop loss at 98$ → distance = 2$
✅ Step 3: Calculate the trade size
The golden equation:
Trade size = risk amount ÷ stop loss distance
In our example:
• Risk = 20$
• distance = 2$ ✅ trade size = 20 ÷ 2 = 10 units
It means:
You buy 10 coins/units at 100$
If the stop is hit (drops 2$)
You lose: 10 × 2 = 20$ only ✅
✅ Step 4 (for futures): Pay attention to leverage
Leverage changes the margin but does not change the real risk.
📌 What matters:
• How much will you lose if the stop is hit? Not how much leverage you used.
🔥 Complete practical example (important)
• Capital: 1000$
• Risk: 1% = 10$
• Entry: 50$
• Stop: 49$ → distance = 1$
Trade size = 10 ÷ 1 = 10 units
Loss at stop = 10 × 1 = 10$ ✅
🧠 Why does this change your results?
Because you control:
✔ Loss before entry
✔ There is no 'shock' when the price drops
✔ No revenge from the market
✔ More trades = more opportunities without destroying the account
📌 The market may let you down in a trade…
But size management prevents the trade from destroying you.
