1. Define money risk first
Choose the maximum amount you are willing to lose before calculating lot size. A 1% risk on a $1,000 account is $10. Whether 1% is appropriate depends on your circumstances; the important part is that the amount is intentional.
2. Leverage is capacity, not a target
A broker may allow very high leverage. You do not need to use the maximum. Higher leverage lets a smaller margin control a larger position, which can magnify losses quickly.
3. Respect jump mechanics
On spike or jump products, price can move abruptly. A visually small stop may still produce a larger monetary loss than expected depending on execution and instrument specification.
4. Think in losing streaks
At 10% risk per trade, five full losses would reduce a $1,000 account to about $590 before considering costs. At 1% risk, the same five percentage losses leave about $951. The point is not that 1% is magic — it is that sizing determines survival.
A simple checklist
- Know the money amount at risk.
- Know the broker's symbol specification.
- Know whether the instrument can jump.
- Avoid stacking several trades that are effectively the same bet.
- Stop trading when emotions start changing the plan.
- Use demo to test unfamiliar mechanics.