Money management
Position sizing: the formula to calibrate every trade
6 min read · by the GetBacktest team
Position sizing is the bridge between your risk management and the market. Set right, every trade risks the same amount, whatever the volatility and stop distance. Set wrong, a single trade can derail an entire plan. It's the most important setting — even before the entry point.
The base formula
Position size = (Capital × Risk %) ÷ (Stop distance × Point value). In other words: how much you accept to lose, divided by what you lose per unit if the stop is hit.
Example: a 10,000 account, 1% risk (100), a 20-point stop, point value 1/point → 100 ÷ (20 × 1) = 5 units. If the stop widens to 40 points, size drops to 2.5 units to keep the same 100 risk.
Why start from risk, not size
Many traders pick a size “by feel” first, then suffer the risk that follows. It's the reverse: fix the risk in currency, then size follows. The stop can vary trade to trade; the risk stays constant.
This makes your trades comparable: a losing streak costs a predictable amount, and your backtest faithfully reflects reality.
Adapting to volatility
Placing the stop based on structure or ATR (volatility) avoids tight stops swept by noise. The formula then adjusts size automatically: the wider the stop, the smaller the position.
Our position-size calculator (/en/outils/taille-de-position) does it for you — enter capital, risk %, stop and point value.
Common mistakes
Risking a fixed amount regardless of the stop, increasing size after losses (“making it back”), or stacking correlated positions that together exceed the intended risk. Each breaks the plan's consistency.
Sizing discipline can be tested: replay your rules on history and verify risk per trade stays stable, whatever the setup.
Don't believe it — prove it
Backtest this concept on real data, tick by tick, and get a robustness verdict. 7 days of Pro free, no card.
Start for freeFrequently asked questions
What percentage to risk per trade?
Typically 0.5 to 2% of capital. Lower = stronger survival against losing streaks; it's the key driver of risk of ruin.
Should size be fixed?
No: keep the RISK fixed, not the size. Size must adapt to stop distance so every trade risks the same amount.
How do I account for volatility?
Place the stop by ATR or structure, then let the formula shrink size as the stop widens. You always risk the same amount.
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