How many contracts or shares to trade, derived from your stop distance and fixed dollar risk.
Position Sizing is the calculation that converts your risk tolerance into a trade size: (account risk per trade in dollars) ÷ (stop distance in dollars per contract/share) = number of contracts or shares. Professional risk per trade is typically 0.5%–1% of account equity. Position sizing is what makes losses survivable: with fixed fractional sizing, a string of losses shrinks your position automatically, and a string of wins compounds it. It's the quiet math behind every long trading career.
The setup decides whether to trade. The size decides whether you survive being wrong. Most blown accounts are sizing failures, not analysis failures.
$50,000 account, 1% risk = $500. ES stop is 4 points = $200 per contract. Size: 2 contracts ($400 risk). Not 5 because you 'feel good about this one.'
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