Markets & Risk Education
Position sizing explained: why risk per trade matters more than entries
GOSPELTRADER Markets Desk · 26 September 2026 · 7 min read
Quick answer
Position sizing sets how much of an account is exposed on each trade. Risking a small fixed percentage keeps any single loss — and any losing streak — survivable. It is risk control, not a prediction tool. This article is educational and is not trading advice.
Educational content only. Nothing here is a recommendation to buy or sell any instrument. Leveraged trading carries a high risk of losing money.
The basic formula
Position size = (account balance × risk percentage) ÷ distance to the stop-loss in price terms. The stop is decided first; the size follows from it.
Why small percentages matter
| Risk per trade | Balance after 10 straight losses |
|---|---|
| 1% | about 90% |
| 2% | about 82% |
| 5% | about 60% |
| 10% | about 35% |
Recovery is asymmetric
A 50% drawdown needs a 100% gain to recover. That asymmetry is the reason professional desks cap risk per position and per day before thinking about strategy.