Step by step
How to read it
- 1Decide the entry.
- 2Put the stop where the idea is wrong — beyond the low.
- 3Measure the distance. Size = money at risk ÷ (distance × value per pip).
Watch out
Common mistake
Choosing the size first and squeezing the stop to fit it. The stop comes from the chart; the size comes from the stop.
Hypothetical numbers
Worked example
- You accept to lose 100 on this trade.
- Stop 20 pips away. On EUR/USD, 1 lot ≈ 10 USD per pip.
- 100 ÷ (20 × 10) = 0.5 lot.
In one line
Definition
How much you trade. It comes from the money you accept to lose and the distance to your stop.
Check yourself
Check yourself
Same money at risk, but the stop is twice as far. The position should be…