StrategyBeginner6 min read
Position Sizing 101: Don't Bet the Farm
Position size isn't an afterthought — it's the most important part of your risk management plan.
Key facts
- Position size determines how much you stand to lose per trade.
- Even a great strategy fails with poor position sizing.
- Start small and scale only after proving consistency.
- Use a calculator before every single trade.
The 1–2% rule in practice
If your account is $10,000, risking 1% means you lose no more than $100 per trade. That includes the spread and your stop distance. Most beginners risk way too much on their first few trades.
Calculating position size
Divide your risk amount by your stop distance. That's how many shares/units you can trade. This single formula is the difference between surviving and blowing up your account.
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