Risk Management

Position sizing is how you control exactly how much money is at risk on a trade. Amateurs pick a lot size first and hope. Professionals pick the stop loss first, then work backwards to the lot size.

1. 1Decide the maximum you will lose on this trade — 1% or 2% of your balance.
2. 2Measure the distance in pips from your entry to your stop loss.
3. 3Divide your risk amount by (pips × pip value per lot) to get your lot size.
4. 4Round DOWN, never up.

Lot size is how big your position is. On gold, a standard lot (1.00) means roughly $1 profit or loss per $0.01 of price movement — that is $100 for every $1 gold moves. This is why beginners use micro lots.

Risking 1–2% means even a brutal losing streak cannot end your account. Ten losses in a row at 1% leaves you down about 10%. Ten losses at 10% risk leaves you down 65% — and mathematically you would then need a 185% gain just to break even.

Your stop loss goes at the price where your reason for the trade is proven wrong. If you are buying because a support level held, the stop goes below that level. If you are selling from a supply zone, the stop goes above that zone.

• Place it beyond structure — under the swing low for buys, above the swing high for sells.
• Add a small buffer for gold's volatility and the spread.
• Never place it at a round number where everyone else has theirs.
• If the required stop is too big for your risk, reduce the lot size — do not shrink the stop.

Risk-to-reward compares what you risk with what you aim to make. Risking $10 to make $20 is 1:2. Take only 1:2 or better and you can lose more trades than you win and still be profitable.

You cannot trade tomorrow's A+ setup with an account you blew today. Every professional treats defence as the primary job and profit as the by-product of surviving long enough for their edge to play out.

• Cap your daily loss — after 2 losing trades, close the laptop.
• Cap your weekly loss — 5% down means the week is over.
• Withdraw a portion of profits regularly so the account is genuinely growing.

• Never revenge trade. Losing then immediately re-entering to 'win it back' is gambling, not trading. Step away for at least an hour.
• Never remove your stop loss. Moving a stop further away turns a small planned loss into an account-ending one. The only acceptable move is to break-even or into profit.
• Never over-leverage. High leverage tempts you into a huge lot size. Leverage should let you hold a properly sized position — not a bigger one.