Stop loss and position size: how to risk 1% on a gold trade

Every trade needs two numbers before entry: where you are wrong (the stop) and how much you are willing to lose (your risk). The lot size follows from them, never the other way round.

Step 1, the stop. Put it where the idea is invalid, for example below the last swing low or below a demand zone. Not where it feels comfortable.

Step 2, the risk. Choose a small fixed percent of your account, often 0.5% to 1%. On a 10,000 dollar account, 1% is 100 dollars.

Step 3, the size. Lot size = risk in dollars / (stop distance in dollars x ounces per lot). With a 20 dollar stop and 100 ounces per lot, 1 lot loses 2,000 dollars, so a 100 dollar risk is 0.05 lots.

Never widen a stop after entry, and never add to a loser. Use the position-size calculator to do the maths for you.

Education only. This is not financial advice. Trading gold with leverage involves a high risk of losing money.

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