Position sizing

Most beginners obsess over the entry price. Professionals obsess over how much to risk on it. The difference is responsible for more long-term outcomes than any indicator or AI signal.

A simple, robust rule is the percent-risk model: decide in advance the maximum loss you will accept on any single trade — typically 0.5%–2% of account equity for retail — and let that figure dictate position size. If your account is £10,000 and your maximum risk per trade is 1%, that is £100. If your stop-loss sits 50 pips away, your position size is £100 ÷ 50 pips = £2 per pip.

This single discipline does three things at once. It prevents any single trade from inflicting a fatal loss. It standardises risk across very different setups (a wide-stop swing trade and a tight-stop scalp risk the same money). And it forces you to decide on a stop-loss before you enter, which is the moment your judgement is clearest.

AI bots that use “fixed lot” sizing — always one contract, always 0.1 BTC — silently violate this principle. As your equity changes, your effective risk per trade swings wildly. Most reputable platforms expose a percent-risk or volatility-targeted sizing option; use it.

Two refinements are worth knowing. Volatility-adjusted sizing scales position size inversely to recent ATR or standard deviation, so risk per trade stays stable when market conditions change. Kelly sizing optimises long-run growth but is famously aggressive; in practice, traders use a fraction of full Kelly (one-quarter is common) to survive estimation error.