Position sizing in 5 minutes — the math that keeps you alive

If you only learn one trading skill, learn this one. Position sizing is the math that decides how many units to buy or sell on each trade. Not what direction. Not when. Just how much.

Most retail traders blow up not because their signals are bad, but because they bet too big on every trade. They go all-in on three good ideas in a row, lose the fourth, and they're done.

This page shows the math. It's not complicated.

The one rule

Never risk more than 1% of your account on a single trade.

That's it. Memorize it. Tattoo it.

If your account is €2,000, the most you can lose on any single trade is €20. Doesn't matter how sure you are. Doesn't matter how good the setup is. €20.

Why 1%?

Because you'll be wrong a lot, and the math has to survive that.

Even a strategy with a 60% win rate (which is rare) will hit losing streaks. With 1% per trade:

You can recover from 82%. You can't recover from 20%. Account math is brutal in one direction:

• Lose 10% → need +11% to break even
• Lose 50% → need +100% to break even
• Lose 90% → need +900% to break even

This isn't a metaphor. It's just math.

The position sizing formula

You have three numbers:

1. Risk per trade — the dollar amount you're willing to lose. (1% of account.)
2. Stop distance in pips — how far away your stop is from your entry.
3. Pip value per unit — how much one pip is worth on the pair you're trading.

The formula:

Position size (units) = Risk per trade ÷ (Stop distance × Pip value per unit)

Example. EUR/USD signal says:

• Account: €2,000
• Risk per trade: 1% = €20
• Entry: 1.0850
• Stop: 1.0890 (40 pips away)
• Pip value: $0.0001 per unit

Position size = €20 ÷ (40 × €0.0001) = 5,000 units

You buy 5,000 units of EUR/USD. If the price hits the stop, you lose €20. Exactly.

chartgrade does this for you

On every card, the position sizer reads your account size + risk preference and tells you the exact number to type into your broker. Don't override it. That's the whole point.

If the sizer says "8,300 units," don't round up to 10,000 because it feels neater. Don't round down to 5,000 because you're scared. Use the number. That's how the math works.

The other rule (the easy one to forget)

Don't double-bet correlated pairs.

If EUR/USD and GBP/USD both flash bullish at the same time, that's not two trades — it's one trade with double the size. EUR/USD and GBP/USD are 80%+ correlated. When EUR/USD wins, GBP/USD almost always wins. When EUR/USD loses, GBP/USD almost always loses.

If you size both at 1% you're really risking 1.8% on the same idea.

The fix: when you open a second correlated position, halve the size. Both at 0.5%.

Pairs to watch out for:

• EUR/USD ~ GBP/USD ~ AUD/USD ~ NZD/USD (all USD pairs move together when USD strengthens or weakens)
• Gold ~ XAU/USD ~ Silver ~ XAG/USD (precious metals move together)
• USD/CHF ~ inverse EUR/USD

If you're long EUR/USD AND long GBP/USD AND short USD/CHF, you've basically taken three trades all betting "USD will weaken." If USD strengthens, you lose three times.

What to type into the broker

For EUR/USD at 5,000 units, here's the broker translation:

The chartgrade card shows both. 0.05 lots = 5,000 units = the same trade size. "Lot" is just a unit of 100,000.

Quick mental check before every entry

1. "How much am I risking?" — Should equal 1% of account, no exceptions.
2. "Where's my stop?" — Should be set before the entry hits.
3. "What's my target?" — Should be at least 1.5× the stop distance.
4. "Am I already in a correlated trade?" — If yes, halve this one.
5. "Is a high-impact event coming up?" — If yes, sit out.

If all five check out, take the trade. The position sizer does the arithmetic. Your job is the discipline.

That's it. That's the whole game.