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Risk and position sizing

Most traders who quit do not quit because their idea was wrong. They quit during a losing run they did not expect, at a size they should not have been trading. These guides cover the numbers that decide that.

Why sizing matters more than entries

Two traders can take exactly the same trades and one ends the year up while the other has stopped trading. The difference is how much they put on each one.

Losses do not undo each other evenly. Lose 10 percent and you need 11 percent to get level. Lose 50 percent and you need 100 percent. That is why size, not signal quality, is usually what ends an account.

The numbers worth knowing

How much you risk per trade. How long a losing run to expect at your win rate. What your worst drawdown is likely to be. And what your average trade is actually worth once wins and losses are combined.

None of them are hard to work out, and knowing them in advance is what lets you sit through a bad stretch instead of changing everything in the middle of it.

All 4 guides

Position sizing, explained without the jargon How to work out how much to trade. The percent risk method, the maths behind it, and why sizing decides survival more than entries do. Risk of ruin, and the drawdown you should expect Even a winning strategy can lose everything at the wrong size. Here is what risk of ruin means, what drives it, and how to keep it near zero. Risk to reward and win rate: the trade off nobody explains A high win rate is not the goal. Here is how win rate and reward to risk fit together, and the break even table you can check your strategy against. What a normal losing streak looks like Long losing runs are a normal feature of a working strategy. Here is how long a run to expect at your win rate, and how to tell a normal one from a real problem.

Test it on what actually happened

Replay any market from any date and find out whether the thing you believe about your trading is true.

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