Position Size With a Small Max Loss: A Plain Walkthrough

When the max loss is small, a single careless trade can end the attempt. The fix is to decide your size from the max loss before you look at the chart. Here is a walkthrough with numbers.

Step 1: pick the risk per trade

Choose a small slice of the max loss, for example 10 percent. On First Pass the max loss is $50, so 10 percent is $5 at risk on any one trade. It means you can be wrong about ten times in a row before the account ends, not two or three.

Step 2: set the stop distance

Decide where you would be proved wrong. Say the market is at 77,000 and your stop is 77 points below, at 76,923. The distance is 77, or 0.1 percent of the price.

Step 3: work out the size

Position size in dollars is the dollar risk divided by the stop distance as a fraction of the price. With $5 of risk and a 0.1 percent stop:

size = $5 / 0.001 = $5,000 of position.

First Pass allows up to $50,000 of position, so that size fits well inside the limit. If your math gives a size bigger than the account's max size, use the max size and accept a smaller stop distance or a smaller risk.

Step 4: check the reward

With a $150 target and $5 of risk per trade, you need roughly 30 times your risk in net profit. If your plan has a 2 to 1 reward to risk, you need about 15 winning trades more than your losing trades balance out. Write that down. It tells you how long the run is.

Step 5: stop rules

• Two losses in a row, you are done for the day.
• Never add to a loser.
• Put the stop in the same moment you enter. Stop-losses always count on the platform.

Why the max loss does not move

Because the max loss is static, the size you work out on day one is still right on day ten. With a trailing floor, your room changes as you win and your size should change too.

Try the numbers free

Open the practice platform, no sign-up, and test the size from Step 3 on a few real setups. Then compare the accounts. Most traders do not reach the target, and nothing here is a promise of income.

OnePass accounts are simulated trading evaluations: you trade a simulated account on live market prices, and you're paid a reward if you pass under the rules. Past results of other traders don't predict yours, and most evaluations are not passed.