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Trading risk & position sizing guides
Clear answers to the questions traders search for, with worked examples and a free calculator for each. Written to be read in five minutes. Looking for indicators? See the guide to the best TradingView indicators.
- 14 guides
- Worked examples
- Free calculators
How much should you risk per trade?
Most professional traders risk between 0.25% and 2% of their account on a single trade. Here is why, what happens at higher levels, and how to pick a number that fits your strategy.
Read the guide →5 min readHow to calculate position size
Position size turns a risk rule into a number of shares, contracts or lots. Here is the formula, three worked examples and the mistakes that cause oversized trades.
Read the guide →5 min readWhat is risk of ruin in trading?
Risk of ruin is the probability that you lose so much that you can no longer trade, or no longer want to. It is driven mostly by how much you risk per trade.
Read the guide →5 min readWhy a 50% loss needs a 100% gain
If your account falls 50%, you need to double what is left to get back to even. The math is simple, and it is the strongest argument for controlling drawdowns.
Read the guide →5 min readWhat is a good risk to reward ratio?
There is no single good ratio. A ratio is only good in combination with your win rate. This guide shows the win rate you need at each ratio and how to judge your own.
Read the guide →5 min readWhat is expectancy in trading?
Expectancy is the average amount you make or lose per trade over many trades. A positive expectancy is the foundation of any profitable strategy.
Read the guide →5 min readWhat is a pip and how do you calculate pip value?
A pip is the standard small step in a forex price. Its money value depends on your position size, the pair and your account currency.
Read the guide →5 min readHow to use Fibonacci retracement
Fibonacci retracements mark common pullback depths after a strong move. They work best as areas to watch, combined with other signals.
Read the guide →5 min readShould you average down on a losing trade?
Averaging down means buying more after a price fall to lower your average cost. It lowers the bar to break even, but it raises your risk.
Read the guide →6 min readWhat is profit factor in trading?
Profit factor compares everything your winning trades made with everything your losing trades lost. It is easy to calculate and easy to misread. Here is the formula, what values mean, and what the number leaves out.
Read the guide →7 min readHow to keep a trading log
A trading log, sometimes called a trading diary, is the table of every trade you take. Done well it takes a minute per trade and answers the questions your memory cannot. Here are the columns, the formulas and a free spreadsheet to start from.
Read the guide →6 min readHow prop firm drawdown rules work
A funded-account challenge has two loss limits: one that resets every day and one that protects the account as a whole. The second comes in several versions, and the differences change how much room you really have.
Read the guide →6 min readHow much to risk per trade in a prop firm challenge
In a challenge, risk per trade is a trade-off between speed and survival. The simulator shows where the trade-off bends for one example, and how to find it for your own rules.
Read the guide →7 min readThe math behind a prop firm challenge pass rate
A pass rate is not a property of a challenge. It is the result of your edge, your risk size and the rules, and each of them can be changed. Here is how much each one moves it.
Read the guide →Last updated November 2026. For education only. Not financial advice.