What a trade plan fixes
Most losses that hurt come from decisions made after the order: moving a stop, adding to a loser, taking a target far too early. A written plan moves the decisions to the moment before, when you are calm. It needs five things: where you enter, where you are wrong (the stop), where you take profit (the target), how much you risk, and therefore the size. This page works out the last two from the first three and shows what the plan implies.
How the numbers are worked out
risk if stopped = size × (stop distance × value per unit + fees)
reward at the target = size × (target distance × value per unit − fees)
break-even win rate = 1 ÷ (1 + reward ÷ risk)The size is rounded down, so the risk shown is never more than the risk you chose. The value of a 1.00 move per unit is 1 for a share or coin, 50 for an E-mini S&P 500 contract, 100 for a lot of gold and 100,000 for a lot of EUR/USD.
Take the plan on the card: a EUR/USD long on a $10,000 account, risking 1% ($100), entry 1.0850, stop 1.0820, target 1.0910. The stop is 30 pips and a pip is $10 per lot, so one lot would lose $300 at the stop. $100 ÷ $300 is 0.3333 lots, which rounds down to 0.33. The loss at the stop is 0.33 × $300 = $99, the reward at 60 pips is $198, a reward-to-risk of 2, so the trade breaks even when 33% of such trades win. See position size calculator and lot size calculator for the sizing arithmetic in detail.
The checklist
The card adds a short list of questions. They are rules of thumb, and you can ignore any of them if your plan says so, but each one is worth answering on purpose:
- Risk is 2% of the account or less. Larger risk per trade makes a normal losing streak dangerous; see how much to risk per trade.
- Reward is at least 1.5 times the risk. Below that, the trade needs a high win rate to pay; the risk reward calculator shows how high.
- The target is on the profit side of the entry. A mistyped stop or target is the commonest error in a hurry.
- Costs are at most 10% of the risk per unit. When fees take a large share of the risk, the plan is paying the broker for the right to trade.
- The size is at least the minimum step. A $500 risk budget cannot buy one E-mini contract that risks $1,000, and the card says so instead of rounding up.
- At your win rate the expectancy is positive (if you enter a win rate). Expectancy is win rate × reward − loss rate × risk, in units of the risk.
What the same trade looks like at other risk levels
Risk per trade is the one number you choose freely, and it changes everything except the chart. For the EUR/USD plan above, with a 45% win rate and the plan's reward-to-risk of 2, the exact odds of the balance ever being 20% below the start over 50 repeats of the plan (from the trader survival game) are:
| Risk per trade | Size (lots) | Risk if stopped | Losses in a row to −10% | to −20% | Ever 20% down in 50 trades (45% wins) |
|---|---|---|---|---|---|
| 0.25% | 0.08 | $24 | 44 | 93 | 0% |
| 0.5% | 0.16 | $48 | 22 | 47 | under 0.1% |
| 1% | 0.33 | $99 | 11 | 23 | under 0.1% |
| 2% | 0.66 | $198 | 6 | 12 | 1.9% |
| 3% | 1 | $300 | 4 | 8 | 7.4% |
At 1% risk it takes 11 losses in a row to be down 10% and 23 to be down 20%, and the chance of ever being 20% down over 50 trades is under 0.1%. At 3% risk it takes 4 and 8 losses, and the chance rises to 7%. The odds assume independent trades and a constant win rate, so they show the shape of the risk, not a forecast. Open the survival game with your own numbers to go further.
Four markets, same method
The method does not change with the market, only the value of a move per unit and the step of the size:
| Plan | Account and risk | Entry, stop, target | Size | Risk | Reward | Reward to risk |
|---|---|---|---|---|---|---|
| EUR/USD long | $10,000, 1% | 1.0850, 1.0820, 1.0910 | 0.33 lots | $99 | $198 | 2 |
| Gold long | $25,000, 0.5% | 2650, 2638, 2686 | 0.1 lots | $120 | $360 | 3 |
| Stock long | $10,000, 1% | 100, 95, 115 | 20 shares | $100 | $300 | 3 |
| E-mini S&P short | $100,000, 1% | 5800, 5820, 5740 | 1 contract | $1,000 | $3,000 | 3 |
For pair-by-pair pip and point values see the instrument pages, such as EUR/USD and gold. Pairs where the dollar is not the quote currency (USD/JPY, for example) need the value per move entered by hand with the Other option, which the pip value calculator can work out.
Using the card
Download the card as an image to keep with your trade journal, or copy the link: it holds your numbers, so anyone who opens it sees the same plan. A card shares a plan and not a result, which makes it a better thing to post than a profit screenshot. Keep a record of each plan and what happened in the trading journal, and compare the plans you followed with the ones you changed.
The formulas
risk = units × (|entry − stop| × value per unit + fees)
reward = units × (|target − entry| × value per unit − fees)
reward to risk = reward ÷ risk, break-even win rate = 1 ÷ (1 + reward to risk)
losses in a row to a fall of x = the smallest n with (1 − risk %)n ≤ 1 − x
Worked examples
EUR/USD long
$10,000, 1% risk, entry 1.0850, stop 1.0820, target 1.0910: 0.33 lots risks $99 to make $198.
Gold long on a $25,000 account
0.5% risk, entry 2650, stop 2638, target 2686: 0.1 lots risks $120 to make $360, a reward-to-risk of 3.
A budget too small for one contract
$50,000 account, 1% risk ($500), E-mini S&P short from 5800 with a stop at 5820. One contract risks $1,000, so the size is 0 and the checklist says the size is below the minimum step. Raise the budget, cut the stop distance or trade a smaller contract.
Frequently asked questions
What is a trade plan?
A written statement, made before the order, of where you enter, where you are wrong, where you take profit and how much you risk, which together fix the size. It moves decisions out of the moment when emotion is highest.
How is the position size calculated?
Risk amount (balance × risk %) divided by the risk per unit (stop distance × the value of a 1.00 move per unit, plus fees), rounded down to the market's step. Rounding down means the risk shown is never above the risk you chose.
Why is my size zero?
Because one unit of the market already risks more than your budget. For example, one E-mini S&P contract with a 20-point stop risks $1,000, so a $500 budget cannot buy it. Raise the risk, narrow the stop or use a smaller contract.
What is the break-even win rate?
The share of trades that must win for the plan to make nothing and lose nothing, ignoring other costs: 1 ÷ (1 + reward-to-risk). At 1 : 2 it is 33.3%, at 1 : 1 it is 50%.
Does the card show my result?
No. It shows a plan: the numbers before the trade. It is not a record of profit or a recommendation, and nothing is uploaded.
Is this financial advice?
No. It does the arithmetic on the numbers you enter. The checklist items are rules of thumb that you can change, and trading carries a risk of loss.
The plan is the easy part. Following it is the hard one.
These indicators help you mark the entry, stop and target levels that go on the card.
Last updated November 2026. For education only. Not financial advice. Results depend on your inputs and cannot predict future performance.