Position sizing: how much to risk per trade
Position sizing is how you decide how big a trade to place. The goal is simple: set your size so that if the trade hits its stop-loss, you lose only a small, fixed slice of your account — not a random amount that depends on how far away the stop happens to be. Sizing, not picking winners, is what keeps an account alive long enough to be profitable.
The 1–2% rule
The most widely used rule of thumb is to risk no more than 1–2% of your account balance on any single trade. On a $5,000 account, 1% is $50 — that's the most you'd lose if the stop is hit, whatever the instrument or the stop distance. Newer traders are usually best served at the 1% end, where a bad run does limited damage.
How to calculate your position size
Three steps turn that rule into an actual order size:
- Cash at risk = account × risk %. ($5,000 × 1% = $50.)
- Stop distance = the gap from your entry to your stop-loss, measured in pips or points. (Say 50 pips.)
- Size = cash at risk ÷ (stop distance × value per unit of size).
Worked example on EUR/USD: one micro lot (0.01 lot, or 1,000 units) is worth about $0.10 per pip, so a 50-pip stop costs $5 per micro lot. To risk $50: $50 ÷ $5 = 10 micro lots, i.e. 0.10 lot. Move the stop wider and the correct size gets smaller — the cash at risk stays $50 either way. That's the whole point. (New to pips? What is a pip? →)
Why fixed-fractional sizing keeps you in the game
Risking a fixed percentage (not a fixed lot size) means your bets shrink automatically during a drawdown and grow as the account recovers. At 1% per trade, even ten losses in a row only draw the account down about 10% — survivable. At 10% per trade, the same streak nearly wipes you out. Surviving the losing streaks is exactly what lets a positive risk-to-reward edge play out over many trades.
Position sizing with EntryPips
EntryPips gives you the entry, take-profit and stop for every signal, but it never assumes an account size — you scale the position to your own balance using the steps above. The app's recommended-capital figure estimates the smallest balance that lets you trade your watchlist while keeping each loss inside the 1–2% guideline. See also how much capital you need to start →
Educational content, not financial advice. Trading carries risk of loss.