Position sizing

The most useful thing a new trader can learn has nothing to do with entries. It's this: decide how much you're willing to lose on a trade before you take it, and size the position from that number.

Step 1: pick your risk per trade

Choose a small, fixed percentage of your account — many traders use 0.5% to 1%. On a $10,000 account, 1% is $100.

Small numbers feel slow. That's the point. They let you survive the losing streaks that every method has.

Step 2: find your stop from the chart

Your stop belongs where your trade idea is wrong — beyond the level you're trading against — not at a dollar amount you'd like to lose.

Say you're buying a rejection of support and the idea is wrong if price trades 8 points below your entry.

Step 3: calculate the size

Contracts = dollar risk ÷ (stop in points × value per point)

On a $10,000 account risking $100 with an 8-point stop:

• MES ($5/point): 8 × $5 = $40 per contract → 2 contracts ($80 at risk)
• ES ($50/point): 8 × $50 = $400 per contract → 0 contracts. The trade doesn't fit your account in ES. That's not a reason to widen your risk rule; it's a reason to trade the micro.

Round down, never up.

Size from the stop, never the stop from the size

The common mistake runs the other way: "I want to trade 2 ES, so my stop is 1 point." Now the stop sits somewhere random, inside normal noise, and gets hit by a market that didn't prove your idea wrong at all.

The chart decides the stop. The risk rule decides the size.

Add a daily limit

Set a maximum loss for the day — for example two or three times your per-trade risk. When you hit it, you're done. The trades after a bad run are usually the worst ones you'll take.