Position sizing: why 1% per trade matters

Position sizing decides how much you lose when a trade is wrong. Get it right and a losing streak is uncomfortable; get it wrong and it ends the account.

The formula

A worked example

Balance $10,000, risk 1% = $100. You trade EURUSD with a 50-pip stop. One pip on one lot is about $10.

If the stop is hit, you lose about $100 — 1% of the account — no matter how confident you felt about the trade.

Why 1%?

With 1% risk, ten losses in a row — which happens to every strategy eventually — cost about 10% of the account. With 5% risk, the same streak costs about 40%, and you would need a 67% gain just to get back.

Our EAs calculate lot size from your balance and stop distance automatically, so the risk stays the same on every trade.

Educational content, not investment advice. Trading carries a high level of risk.