Risk a fixed share of the account
The most common method is to risk a fixed percentage of the account on every trade. The position size is then the amount you are willing to lose, divided by the loss per unit if the stop is hit. With a 10,000 account and a risk of 1 percent, you accept to lose 100.
On EURUSD, a pip is worth about 10 per standard lot for an account in dollars. With a stop of 50 pips, one lot loses about 500 if the stop is hit, so the position that risks 100 is 0.2 lot. The same logic applies to any instrument: risk in money divided by the loss per unit at the stop.
What a losing streak costs
After n losing trades in a row at a risk of r per trade, the account has lost 1 minus (1 minus r) to the power of n. At 0.5 percent per trade, ten losses cost about 4.9 percent. At 1 percent, about 9.6 percent. At 2 percent, about 18.3 percent.
These are not extreme cases. A strategy with a 40 percent win rate will produce streaks of this length over a long enough period, so the size you choose today decides how you live through them.
Recovering from a loss is asymmetric
A loss of 10 percent needs a gain of 11.1 percent to get back to the starting level. A loss of 20 percent needs 25 percent. A loss of 50 percent needs 100 percent. The deeper the drawdown, the harder the recovery, which is why limiting the size of losses matters more than chasing the size of gains.
Limits on top of the percentage
Many traders add two rules to the risk per trade: a maximum loss per day, after which they stop trading, and a maximum number of open trades. Several trades opened together on correlated markets can behave like one large trade, so the number of positions is a risk in itself.
In the ATLAS profile you can write down your risk per trade, your daily loss limit and your maximum number of open trades. The profile then shows what a series of ten losses would cost at your chosen risk, and how many losing trades your daily limit allows.
Sizing is not advice
The right percentage depends on your strategy, your account and your tolerance for losses. The examples on this page show arithmetic, not a recommendation. Nothing here is financial advice.
Frequently asked questions
What percentage of my account should I risk per trade?
There is no universal answer. Smaller values make long losing streaks survivable, and the right figure depends on your strategy and on how much volatility in your account you can accept.
Does position sizing change my expectancy?
No. Expectancy in R does not depend on size. Size decides how large the swings in your account are, and whether a bad streak is survivable.
See it in ATLAS
Future Simulation
Thousands of possible futures for a strategy, so you see the drawdowns you would have to live with.
Trading Journal
Record your trades, review them on the chart and get an AI diagnosis of your habits.
Strategy Lab
Describe a strategy in plain words or paste a Pine Script; ATLAS turns it into rules and measures it.
Terms used in this guide
Position sizing, Risk of ruin, Drawdown, Stop loss, Pip, Lot.
More guides
This guide explains methods and arithmetic. It is not financial advice, and past results do not guarantee future ones. Read the risk disclosure.
