LEARN TO TRADE · Beginner · 7 min read · 3 Nov 2026 · Navion Pro Research
Position Size: How Much Should One Trade Risk?
Two traders can take the same trade, at the same price, with the same stop loss, and end up in very different places. The difference is how much each one traded. This guide shows how to size a position from the amount you are willing to lose, rather than from a hunch.
Trading leveraged products carries a high level of risk to your capital. Losses can exceed deposits. Past performance is not an indicator of future results.
Key Points
- Position size is how big a trade is: how many lots, ounces, shares or units.
- Many traders decide first how much of their account they will risk on one trade, then size the position to match.
- Your stop loss sets how far the price can move against you. Your size sets what that move costs.
- Losses are harder to win back than they look: a 50% loss needs a 100% gain to recover.
Why size matters more than you think
No trader wins every trade. A run of losses will come at some point. What decides whether an account survives that run is not how good the entries were, but how much each losing trade cost.
You cannot control whether the next trade wins. You can control how much it costs if it does not.
Risk per trade
Risk per trade is the most you are prepared to lose on a single trade if your stop loss is hit, as a share of your account.
Many traders keep this to a small share of their account, so no single loss does serious damage. Whatever level you choose, decide it before you trade, write it into your trading plan and keep it the same from trade to trade.
A simple way to size a trade
Position size comes from three numbers: your account balance, your risk per trade and the distance to your stop loss.
Position size = (account balance × risk per trade) ÷ (distance to stop loss × value of a 1 point move per unit)
For gold, 0.01 lot is 1 ounce, so a $1 move in the gold price changes the value of 0.01 lot by $1.
A worked example
This example is for illustration only. The figures are not real prices or a recommendation.
- A trader has $2,000 in their account and risks 1% per trade. The most they will lose on one trade is $20.
- They plan to buy gold at $3,900, with a stop loss at $3,880. The stop is $20 away.
- A $20 move costs $20 on 1 ounce. So their position size is 1 ounce, or 0.01 lot.
Now the same trader, with the same $20 risk, on two other setups:
| Distance to stop loss | Position size that risks $20 |
|---|---|
| $10 | 2 ounces (0.02 lot) |
| $20 | 1 ounce (0.01 lot) |
| $40 | 0.5 ounces, below the 0.01 lot minimum |
A wider stop means a smaller position. If the smallest trade still risks too much, the trade does not fit the plan.
What a losing streak does
Here is what is left of a $10,000 account after 10 losing trades in a row, at different levels of risk per trade. Each loss is taken from what is left after the one before.
| Risk per trade | Account left after 10 losses |
|---|---|
| 1% | 90.4% ($9,044) |
| 2% | 81.7% ($8,171) |
| 5% | 59.9% ($5,987) |
| 10% | 34.9% ($3,487) |
The same losing run is a setback at 1% and a disaster at 10%.
Why losses are hard to win back
A loss shrinks the account you have left to recover with. So the gain needed to get back to where you started is always bigger than the loss.
| Loss | Gain needed to get back to the start |
|---|---|
| 10% | 11.1% |
| 20% | 25% |
| 30% | 42.9% |
| 50% | 100% |
| 75% | 300% |
Risk disclosure: Trading involves significant risk of loss and is not suitable for all investors. Past performance is not indicative of future results. This brief is for information and education only. It is not investment advice, a recommendation or an instruction to buy or sell anything. The likely market reactions described here are our assessments of what could happen, not predictions, and markets can and often do move differently. Figures and forecasts come from third party sources and may change. Make your own decisions, and consider independent advice if you are unsure.
