How to Size a Trade: The Risk-First Foundation
Most traders don't blow up because their strategy is bad. They blow up because one trade was too big.
Welcome to Day 1. Over five short lessons you'll get the risk-first foundation almost nobody teaches — the part that actually keeps traders in the game. It starts with the single most important number in trading: how much you risk per trade.
The rule that keeps you in the game
Get your strategy 70% right but your position size wrong, and one bad day can end the account. Get your sizing right, and you survive long enough for a real edge to play out. Sizing is the foundation everything else sits on.
The rule: risk a small, fixed fraction of your account on any one trade — usually 0.5% to 2%. On a $10,000 account at 1%, that's $100 at risk per trade. No single loss can seriously damage you, and that survival is what compounding is built on.
The formula (work backwards from your risk)
Risk per trade ($) = Account × Risk %. For example, $10,000 × 1% = $100.
Position size = Risk $ ÷ (Entry − Stop). If you'll risk $100 and your stop sits $2 away from entry, your position is 50 shares. The distance to your stop — not your account size — sets how big the trade can be.
This works for any instrument priced per unit: stocks, forex, crypto, or shares on any exchange worldwide. For forex lots and futures contracts, treat 'units' as your base unit and adjust for contract size.
Put it into practice
A free calculator to apply today's lesson right now — no sign-up needed.
Try the Position Size Calculator →Day 1 takeaways
- Risk a small, fixed % (0.5–2%) of your account per trade.
- Set the risk in dollars first, then let the stop distance decide the size.
- Survival compounds; a blown account does not.
Free · 5 days
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Educational only — not financial advice. Trading involves substantial risk of loss.
Educational content only — not financial advice. Trading involves substantial risk of loss and is not suitable for everyone.