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Risk Management

Position Sizing Is the Key to Survival

More than any strategy, how much you move per trade (position sizing) decides your capital's lifespan. A high win-rate means nothing if one large loss craters the account.

Asymmetry of Recovery

Recovery from a drawdown is only possible if the loss is shallow. Lose 20%, and you need +25% to break even; lose 50%, and you need +100%. This mathematical nonlinearity is the exact reason to defend fixed risk (1–2%) at all costs.

Practical Calculation

Risk Amount = Capital × Allowed % (e.g., 1%). Divide this by the per-lot risk (pips × pip value) to calculate the objective, emotion-free lot size.

※This diagnosis is for self-understanding only. It is not investment advice or a solicitation. All trading decisions are your own responsibility.

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