Guide 3 · Position sizing
Not how confident you feel, and not how much you have: the distance of the stop loss. One formula, one example worked out step by step - and what the worst losing streak in our own archive would have done to a $1,000 account.
The size of a position is not a feeling: it is a calculation. Decide in advance how much of your account you accept to lose on that trade, and let the distance of the stop tell you how big the position can be.
Position size = (account × risk %) ÷ stop distance
A $1,000 account. You accept to risk 1% per trade - $10 - and the signal has its stop 2% away from the entry, which is close to the average of our engine (2.07%).
| Value | ||
|---|---|---|
| Account | $1,000 | the money you have |
| Risk per trade | 1% = $10 | the money you accept to lose |
| Stop distance | 2% | where the market says you are wrong |
| Position size | $10 ÷ 0.02 = $500 | the size that makes a 2% move worth $10 |
| Margin at 3x | $500 ÷ 3 = $167 | what the exchange blocks while the trade is open |
| If it reaches TP3 (+1.80R) | +$18 | 1.80 × the $10 you risked |
| If the stop is hit | −$10 | exactly what you decided, not more |
That is the whole mechanism. Notice the order: the risk came first, the stop came from the signal, and the size was the result. Now invert it - choose the size first - and see what happens.
Almost everyone "risks $500 per trade". But a position is not a risk: the same $500 risks a different amount depending on where the stop is.
| Stop distance | Position | What you actually risk |
|---|---|---|
| 1% away | $500 | $5 - 0.5% of the account |
| 2% away | $500 | $10 - 1.0% of the account |
| 5% away | $500 | $25 - 2.5% of the account |
Same position, five times the risk. And it happens silently: the trade that "felt the same" was carrying five times more weight. This is how an account dies without anyone making an obviously reckless decision.
Our engine has closed 203 signals, of which 86 were losses. We counted how they arrived in sequence, and the longest losing streak was 7 in a row - it happened once. There were also four streaks of 4, five of 3, eleven of 2.
Seven losses in a row is not a catastrophe. It is a normal Tuesday in leveraged trading. What it costs you depends on one number: the percentage you risk per trade.
| Risk per trade | After 7 losses in a row | Account left |
|---|---|---|
| 0.5% | −3.4% | $966 |
| 1% | −6.8% | $932 |
| 2% | −13.2% | $868 |
| 5% | −30.2% | $698 |
| 10% | −52.2% | $478 |
The same seven signals, the same signals that produced +29.80R overall. At 1% you lose 7% and you are still trading. At 10% you have lost more than half of the account, and the recovery needed to get back to $1,000 is now +109% instead of +7%. That asymmetry - the reason a losing streak is not the same event for two traders - is the entire argument for sizing small.
Those numbers are not a recommendation for your account - they are the numbers we publish, so you can see the logic and apply it at your own scale. What they guarantee is that a bad run is survivable by construction, which is the only property a strategy needs in order to still exist next month.
The honest part
Sizing correctly does not make a strategy profitable: it makes it survivable. Our average result is +0.147R per closed trade over 203 trades - small, and it only compounds if the account is still there to compound it. Past results are not a promise about the future, and leveraged trading can lose the whole amount you put in.
Size = (account × risk%) ÷ stop distance. Risk 1% of a $1,000 account with the stop 2% away, and the position is $10 ÷ 0.02 = $500. That is the whole method: the stop decides the size, not the other way round.
It is a common starting point, not a law. What matters is that the number is small enough to survive a bad run and that you keep it constant. Our engine uses 0.5% on low-confidence setups, 1% in the middle and 2% on high-confidence ones, with a hard cap at 3%. With a 7-loss streak in the archive, those numbers are the difference between a bad week and a closed account - the table on this page shows it.
Then the position gets smaller, and that is the formula working. A 5% stop means a $200 position instead of $500 for the same $10 of risk. Many traders do the opposite: they like the setup, keep the size, and quietly accept four times the risk.
As few as you can follow, and with a total risk you can state out loud. Our engine opens at most 4 positions at once (plus one slot for meme coins) and each carries its own 0.5-2%, so the worst case is bounded and known in advance. If you hold eight positions at 2% each, a bad hour is a 16% loss - and it will not feel like eight independent bets while it is happening.
No. Leverage changes how much margin the same position requires, not how big the position is. On a $1,000 account with a 2% stop and 1% risk, the position is $500 whether you use 2x, 3x or 10x; what changes is the margin blocked ($250, $167, $50) - and how close liquidation sits. See the leverage guide.
All the numbers on this page come from the engine's archive: see every closed signal.