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Risk & position sizing: the math that decides survival
Position size changes both gains and losses. Risk models can illustrate the effect of different settings under their assumptions, but they cannot establish a safe boundary for a live account in advance.
This cluster explains risk per trade, R multiples, drawdown recovery and risk of ruin, alongside exposure checks and stop rules. Use the linked calculators to explore your assumptions, and read their limits before applying the result.
Start with how much to risk per trade. Then run your own win rate and R through the risk-of-ruin calculator and read the number it prints twice.
Start here
How Much to Risk Per Trade: The Position Sizing Math That Decides Survival
14 min read
Risk-of-ruin calculator →
your inputs, simulated
Gold lot size calculator →
calculate size from a stop, risk amount and verified contract specification
Open-position risk worksheet →
add planned cash losses at stops without treating the total as a maximum loss
All free calculators →
free, in-browser
The core math
How Much to Risk Per Trade: The Position Sizing Math That Decides Survival
There is an exact, mathematically optimal answer to 'how much should I risk per trade.' It's called the Kelly criterion — and betting it at full strength is one of the fastest ways to blow up a real account. Here's the formula, the trap inside it, and the fraction the pros actually use.
Position Size Kills.
The thing that blows up trading accounts usually isn't the strategy. It's the position size — and unlike an edge, that's something you can fix before your next trade.
Your Risk of Ruin Isn't Zero.
We computed real ruin probabilities with the same seeded engine behind our free calculator: a trader with a genuine edge, risking a 'standard' 2% per trade, has a 0.6% chance of losing half the account — and a 43% chance of touching the -10% line that fails a prop challenge. The curve doesn't climb. It explodes. Every number regenerates from one command.
Drawdown, honestly
Drawdown Recovery: The Math Is Brutal. The Plan Isn't.
Losing 50% means you need +100% just to get back — the asymmetry every trader learns too late. Here's the full recovery table from our public calculator, the three kinds of drawdown and how to tell which one you're in using your own journal, and the honest part: our own EA's backtest once sat 73% below its peak. We publish that number on purpose.
R Multiple Trading: How to Calculate R — and Why Counting Money Lies
Dollars and win rate are the two numbers that hide whether you actually have an edge. Here's the unit professionals measure in instead — and the one honest number it produces, which you can calculate on trades you've already made.
The Drawdown Trap.
A normal drawdown is survivable — your own backtest expects it. What kills the account is the instinct that arrives with it: size up, win it back fast. Here's why your brain demands the one move the math forbids, and the pre-written ladder that lets you size down without having to be brave in the moment.
Exposure and stop rules
One Trade, Five Times.
Open five 'different' positions that rise and fall together and you don't own a portfolio — you own one oversized bet wearing five tickets. Here's how to see your real exposure, and the desk-grade trick that counts how many bets you actually have.
The Kill-Switch.
Most blown accounts weren't killed by a bad strategy. They were killed by the absence of one sentence, written in advance: this is the point where I stop. Here's how to write it — in three tiers — today.