Position sizing is the single most important skill a trader can develop — more important than entry timing, indicator choice or even market selection.
LOT SIZES EXPLAINED: A standard lot in forex is 100,000 units of the base currency. A mini lot is 10,000 units; a micro lot is 1,000 units. For a 1-pip move on EUR/USD, a standard lot gains or loses $10.
THE 1% RULE: Never risk more than 1% of your account on any single trade. With a $10,000 account, your maximum risk per trade is $100. Your stop distance and this risk budget together determine your lot size.
SCALING IN AND OUT: More advanced traders scale into positions — adding to a winner — and scale out of winners, closing partial positions at interim targets. This is position management, not gambling.
