Course: Risk & Position Sizing·Lesson 1 of 2·8 min read·Last reviewed 11 May 2026
Why position sizing matters
Edge without sizing is a slow leak. Here is the math brokers skip.
Dr. Maya Halloran
CFA · 14 yrs on a commodities prop desk · ex-lecturer, NYU Stern
By the end of this lesson you'll be able to:
- Explain why win rate alone does not determine survival
- Connect stop distance to dollars at risk
- State why oversized trades destroy learning
Survival before brilliance
You can be right often and still go broke if each loss is too large relative to your account. Position sizing is how you cap the damage while your process is still forming.
Try this
Take your last five losing trades. Multiply average loss by how many you could take before a 20% drawdown. That number is your real risk budget.
Quiz — Test your understanding
1. A 60% win rate with oversized losses can still:
2. Position size should be driven primarily by:
3. Oversized trades hurt beginners because:
Next lesson
The 1% rule isn't a rule
- Calculate position size from equity, stop distance, and risk %
- Explain why two traders following "1%" can have different real risk
5 min readContinue to next lesson