Size comes from the loss you accept

Position size is the amount you trade. It should fall out of a loss you already accepted, not out of how excited the chart looks.

Here is the arithmetic, as a classroom illustration and not a suggestion to use these numbers. Suppose a practice account has 1,000 units of currency. You decide that being wrong on this idea may cost 10. The invalidation sits 0.50 away from the entry. Size is the loss divided by the distance: 10 / 0.50 = 20 units. If price reaches the invalidation, the loss is about 10, before fees and spread.

Change any input and the size changes. A wider invalidation means a smaller position if the accepted loss stays at 10. A tighter invalidation means a larger position, which is not "safer" — you are simply packing the same loss into a shorter distance, and spreads matter more.

• Pick the loss limit away from the screen, as a written rule for the practice account.
• Then measure the distance to invalidation.
• Then divide. Do not start from the position you wish you were holding.

Fees, spread, and slippage make the real loss a little worse than the clean division. Include them when you journal a practice trade. Nothing here is a recommended percent, product, or broker.