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Chapter 5 Workbook

Position Sizing
Mastery

Calculate exactly how much to trade based on your risk tolerance. This is the skill that keeps you in the game.

4
Visual Tools
1
Key Formula
∞
Trades Saved
📚

How to Use This Module

Master position sizing step by step

  • Understand the formula components visually
  • Play with the interactive calculator to see relationships
  • Compare different risk levels and their consequences
  • Run the survival simulator to understand why risk % matters
1

The Position Sizing Formula

Breaking down the calculation into visual components

📐 How Position Size is Calculated
Account Balance
₱100,000
×
Risk %
1%
=
Risk Amount
₱1,000
Stop Distance
50 pips
×
Pip Value (0.1 lot)
₱10
=
Cost per 0.1 Lot
₱500
Risk Amount
₱1,000
÷
Cost per 0.1 Lot
₱500
=
Position Size
0.20 lots
💰 Your Account Balance
₱100,000
Safe Capital: ₱99,000
1%
Protected Capital
Amount at Risk This Trade
💡 Understanding Pip Values (EURUSD)
0.01 Lot (Micro)
₱1
per pip movement
0.10 Lot (Mini)
₱10
per pip movement
1.00 Lot (Standard)
₱100
per pip movement
📐
The Key Insight
A wider stop-loss means you need a SMALLER position size to keep the same risk amount. A tighter stop-loss allows for a LARGER position. This is why position sizing depends on your stop distance!
2

Interactive Position Sizer

Adjust the sliders and watch how each variable affects your position size

🎛️ Adjust Variables in Real-Time
See exactly how each change affects your position size
Account Balance ₱100,000
Risk Per Trade 1%
Stop Distance 50 pips
Pip Value (per 0.1 lot) ₱10
Calculated Position Size
0.20
lots
Risk Amount
₱1,000
Cost if Stopped
₱1,000
Profit if 1:2 RR
₱2,000
📊 What Different Position Sizes Look Like
3

Risk Levels Compared

See exactly what happens with different risk percentages on a ₱100,000 account

⚖️ Choosing Your Risk Per Trade
Based on ₱100,000 account with 50 pip stop-loss
1% Recommended
Risk Amount ₱1,000
Position Size 0.20 lots
Losses to -20% 20 trades
Losses to Wipeout 100 trades
2% Moderate
Risk Amount ₱2,000
Position Size 0.40 lots
Losses to -20% 10 trades
Losses to Wipeout 50 trades
5% High Risk
Risk Amount ₱5,000
Position Size 1.00 lots
Losses to -20% 4 trades
Losses to Wipeout 20 trades
⚠️
The Math Doesn't Lie
At 5% risk, just 4 consecutive losses puts you in a 20% drawdown. Losing streaks of 4-6 trades are COMMON even with good strategies. This is why professionals rarely exceed 1-2% risk.
4

Survival Simulator

Visualize how losing streaks affect your account at different risk levels

🎰 Consecutive Loss Visualization
Each block = 1% of your account. Watch what happens during a losing streak.
100%
Account Remaining
0%
Drawdown
0
Consecutive Losses
5

Practice Exercises

Test your understanding with real calculations

Exercise 1 Basic Position Sizing
Scenario

Account: ₱50,000 | Risk: 1% | Stop: 25 pips | Pip Value: ₱10/0.1 lot

  1. 1What is your risk amount in ₱?
  2. 2What is the cost per 0.1 lot if stopped?
  3. 3What position size should you use?
1. Risk Amount: ₱50,000 × 1% = ₱500
2. Cost per 0.1 lot: 25 pips × ₱10 = ₱250
3. Position Size: ₱500 ÷ ₱250 = 0.20 lots
Exercise 2 Wide vs Tight Stop Comparison
Scenario

Account: ₱100,000 | Risk: 1% | Pip Value: ₱10/0.1 lot

Compare position sizes for a 30 pip stop vs a 100 pip stop

  1. 1Position size with 30 pip stop?
  2. 2Position size with 100 pip stop?
  3. 3Why is the tighter stop allowing a larger position?
Risk Amount: ₱100,000 × 1% = ₱1,000 (same for both)
1. 30 pip stop: ₱1,000 ÷ (30 × ₱10) = ₱1,000 ÷ ₱300 = 0.33 lots
2. 100 pip stop: ₱1,000 ÷ (100 × ₱10) = ₱1,000 ÷ ₱1,000 = 0.10 lots
3. Explanation: With a tighter stop, each pip of movement costs less total money, so you can afford more lots while keeping the same ₱1,000 maximum loss. With a wider stop, each pip costs more total, so you need fewer lots to stay within your risk limit.
Important Disclaimer

This workbook is for educational purposes only. Forex and cryptocurrency trading involve substantial risk of loss. No content should be construed as investment advice.

🎯 Key Takeaway

Position sizing isn't about how much you CAN trade—it's about how much you SHOULD trade to survive the inevitable losing streaks and stay in the game long enough to be profitable.