Position Sizing Explained: The Only Risk Control You Own
How to calculate position size from account risk, stop distance and instrument value — and why sizing, not entry timing, determines whether accounts survive.
Position sizing answers one question: how much of your account is at stake if this trade hits its stop?
The formula
“Position size = (Account equity × Risk per trade %) ÷ (Stop distance × Value per unit)”
A worked gold example
- Equity: $10,000
- Risk per trade: 1% = $100
- Stop distance: $5.00 on XAU/USD
- Value per $1 move on 0.01 lots: $1
- Position size = 100 ÷ (5 × 1) = 0.20 lots
Risk per trade guidelines
| Risk per trade | Consecutive losses to hit -20% |
|---|---|
| 0.5% | ~44 |
| 1% | ~22 |
| 2% | ~11 |
| 5% | ~4 |
The rule most investors break
Increasing size after a winning streak, and decreasing it after a losing one, is the exact inverse of what the arithmetic supports. Set your size on capital and drawdown tolerance, not on recent results. See What is drawdown?.
Frequently asked questions
Most professional risk frameworks sit between 0.5% and 2% of equity per trade. Higher than that and a normal losing streak becomes an account-threatening drawdown.
Indirectly. The copier scales lot sizes automatically, so your sizing decision is how much capital you allocate and at what amplification level.
The Sonic AI Research Desk documents how the XAU/USD strategy behaves in live markets, using the linked public MyFXBook account as its source for Sonic AI historical performance figures. Market data, broker terms and illustrative calculations are sourced and labelled separately.
Put the theory to work
Open an account from $10 and copy the same verified gold strategy these guides analyse — or talk it through first.
