Calculate optimal position size based on your account balance, risk percentage, and stop loss distance.
Position sizing is the single most important risk management skill in forex trading. The lot size determines how much money you risk per trade. Get it wrong, and even a winning strategy will blow your account.
Risk Amount = Account Balance x Risk Percentage. Most professional traders risk 1-2% per trade.
Stop Loss Distance = The difference between your entry price and stop loss price.
Pip Value = Depends on the currency pair and lot size.
A trader with 60% win rate can still blow their account with poor position sizing. Conversely, proper risk management means you can survive losing streaks and compound your winners. The 1% rule is a good starting point: never risk more than 1% of your account on a single trade.
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