Sizing from your stop fixes the dollars at risk if the stop is hit (before fees and slippage). It does not account for gaps through your stop or partial fills. Educational, not financial advice.
How it works
Risk a fixed slice of your account — say 1% — and let the stop distance set the size: units = (account × risk%) ÷ |entry − stop|. Tight stops allow bigger size for the same risk; wide stops force smaller size. The point is consistency: every trade loses the same amount when wrong, so variance can’t wreck the account. Thin liquidity widens real slippage, so size down where the book is thin.
FAQ
How do you calculate position size?
Decide how much of your account to risk on the trade (e.g. 1%), then divide that dollar risk by the distance from your entry to your stop-loss. That gives the number of units to trade so the stop, if hit, loses exactly your intended risk.
How much should you risk per trade?
A common rule of thumb is 0.5%–2% of account equity per trade, so a string of losses cannot ruin the account. The right number depends on your strategy and risk tolerance; this is not financial advice.
Why size from the stop instead of leverage?
Sizing from your stop-loss fixes how much you lose if wrong, regardless of leverage. Leverage just determines the margin required for that position — risk is set by stop distance and size, not by the leverage number.