Protect the downside first.

1) Define your maximum risk per trade

A common baseline is 0.5 to 1.0 percent of account equity per trade. The exact number is less important than consistency. Smaller size allows you to survive losing streaks and keep executing your plan.

2) Position sizing is non-negotiable

Size your position based on the distance to your stop loss, not your conviction level. This keeps every trade inside your risk budget.

Position size = (Account equity * Risk %) / (Stop distance * Pip value)
      

If the stop is wide, your size goes down. If the stop is tight, your size goes up. Either way, the dollar risk stays fixed.

3) Risk-reward is a tool, not a religion

A 1.5R or 2R target can be useful, but rigid targets can also reduce your edge. Use structure and volatility to set realistic exits, then evaluate results across a sample.

4) Control daily and weekly drawdown

Set a maximum daily loss and stop trading when it is hit. This prevents emotional revenge trading and protects the account from a single bad day.

• Daily loss limit: 2R to 3R is a common range.
• Weekly loss limit: pause if you hit 4R to 6R in a short window.

5) Use checklists before entry

Checklists reduce impulsive trades. They should include trend context, key levels, volatility state, and news risk.

6) Track outcomes with a journal

Log every trade with entry, stop, target, and the reason for the setup. Review results weekly to spot which setups perform and which do not.

7) Example position sizing

Suppose a 1,000 USD account risks 1 percent (10 USD). If your stop is 20 pips and a pip is worth 0.50 USD, then:

Risk per trade = 10 USD
Stop distance = 20 pips
Pip value     = 0.50 USD
Position size = 10 / (20 * 0.50) = 1.0 unit (mini lot equivalent)
      

The exact units depend on your broker, but the logic stays the same.

8) Risk is your edge protector

Even a good strategy can fail if you oversize. By limiting risk, you give the strategy time to work across a meaningful sample.