Lesson 3 / 7
Risk comes first
The single skill that separates survivors from blown accounts. Learn what leverage really does, then size trades so no losing streak can take you out.
- ReadLeverage and risk, explained simply→
- PracticePosition size calculator→
- PracticeSurvive the market: 20 trades→
Quick check
1 / 2Two questions — get them right and the lesson is done.
You have $1,000 and risk 1% per trade. After 10 straight losses you still have roughly…
About this lesson
Position sizing is the one skill that separates traders who survive from those who do not, and it is unglamorous enough that beginners routinely skip it. The method is simple: decide what percentage of your account you are willing to lose on a trade, measure the distance to your stop-loss, and size the position so that hitting the stop costs exactly that amount. Everything else follows from those three inputs.
The reason it matters is arithmetic. Losing streaks are normal even for profitable strategies, and drawdowns are asymmetric: a 50% loss requires a 100% gain to get back to even, while a 20% loss needs only 25%. Small consistent risk keeps you in the shallow end of that curve. Leverage interacts directly with this — it raises the size of position your deposit can control, which means it magnifies both the gain and the loss without changing your odds at all.
Key takeaways
- Risk a fixed small percentage per trade, then size the position to match your stop.
- At 1% risk, ten straight losses still leave roughly 90% of the account.
- Drawdowns are asymmetric — deep losses need disproportionately large gains to recover.
- Leverage changes the size of the outcome, never the probability of it.