lotsize

📐 POSITION SIZING & LOT SIZE: NEVER RISK MORE THAN YOU PLAN

Knowing your risk percentage is not enough.

You also need to know how much position size to use based on your account balance, risk amount, and Stop Loss distance.

What is Position Sizing?

Position sizing determines how large your trade should be based on how much you are willing to risk.

Simple Formula

Risk Amount = Account Balance × Risk %
Then:
Position Size = Risk Amount ÷ Stop Loss Distance

Example

Account Balance: $10,000
Risk per trade: 1%
Maximum Risk: $100

If your Stop Loss is wider, your position size should be smaller.

If your Stop Loss is tighter, your position size can be larger — while keeping the same dollar risk.

Why does it matter?

✅ Keeps risk consistent
✅ Prevents oversized positions
✅ Protects your trading capital
✅ Makes your strategy easier to manage

🏆 Golden Rule

Don't choose your lot size first and then calculate your risk.

Calculate your risk first → set your Stop Loss → then determine your position size.

For educational purposes only. Not financial advice.

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