The one number that keeps accounts alive. Size every trade from the risk, not from the feeling.
Position size = (account × risk%) ÷ |entry − stop|. You decide the maximum dollar loss first — say 1% of a $5,000 account, which is $50. The distance from entry to stop tells you how much you lose per unit if you're wrong. Divide, and you get the exact quantity where a stopped-out trade costs precisely what you chose — never more.
This is why professionals can be wrong repeatedly and stay in business: at 1% risk per trade, twenty consecutive losses — a genuinely bad streak — still leaves about 82% of the account. At 10% risk, the same streak leaves 12%. The formula is the difference.
| Risk per trade | After 10 straight losses | After 20 straight losses |
|---|---|---|
| 1% | ~90% of account left | ~82% left |
| 2% | ~82% left | ~67% left |
| 5% | ~60% left | ~36% left |
| 10% | ~35% left | ~12% left |
Sizing from leverage, not risk. Leverage only changes margin posted — your quantity must come from this formula, then pick leverage low enough that liquidation sits far beyond your stop. Widening the stop after entry. That silently multiplies your risk beyond what you sized for. Skipping the calculation "just this once". The one unsized trade is usually the one that does the damage.