Position sizing and the 1% rule: a calculator and a plain-English explanation

Most new traders don't blow up an account because they picked the wrong direction — they blow it up because they never decided in advance how much a wrong guess was allowed to cost them. Position sizing is the habit that fixes that. It turns "I think this will go up" into a bet with a defined, survivable downside.

The 1% rule, in plain terms

A common starting point is risking no more than 1% of your account on any single trade. On a $1,000 account, that's $10 — not $10 of the position size, but $10 of what you're willing to lose if the trade goes against you and hits your stop-loss. Some traders use 0.5%, some use 2%; 1% is simply a widely used, conservative default for beginners.

Why this matters more than your entry signal

Two traders can use the exact same strategy and get completely different outcomes based on position size alone. Risk too much per trade, and a normal losing streak — which happens to every strategy, no matter how good — can end an account before the strategy ever gets a fair chance to prove itself.

Try it yourself

Enter your account size, the percentage you're willing to risk, and your entry and stop-loss prices. The math runs instantly, entirely in your browser.

What this calculator doesn't cover

• Leverage and margin requirements, which vary by broker and instrument
• Spreads, commissions, and overnight financing costs
• Correlation risk if you're holding multiple related positions at once

Trading CFDs and forex carries real risk of loss, and this tool is math, not advice — always confirm the final sizing against your own broker's calculator before placing a trade. If you are weighing up an account at all, our CFD and forex primer covers what to check first.