Position sizing is how आप translate a trade idea into an exact number of लॉट so that a loss costs a fixed, planned amount. It is the single most practical skill in risk management.
The percent-risk model
जोखिम a small, fixed percentage of your account per trade — commonly 0.5% to 1%. On a $5,000 account, 1% is $50. Every trade is sized so that hitting your stop-loss loses about that amount, no more.
The sizing formula
पोज़िशन साइज = (account × risk %) ÷ (stop distance in pips × pip value). If your stop is 25 pips away and a micro lot's pip value is $0.10, then $50 of risk ÷ (25 × 0.10) = 20 micro लॉट. Wider stops mean smaller size; tighter stops allow larger size — same money at risk either way.
Why fixed-percent survives
Risking a fixed percentage means your position shrinks automatically during a losing streak (each loss makes the account, and so the अगला position, smaller) and grows as आप recover. It mathematically prevents the death spiral of risking more to win back losses.
Key takeaways
- जोखिम a fixed small % (0.5–1%) of the account per trade.
- Size = (account × risk%) ÷ (stop pips × pip value).
- Fixed-percent sizing shrinks risk in drawdowns and prevents the death spiral.