The Position Sizing Mistake That Blows Up 90% of Trading Accounts
Most traders obsess over entries. "What should I buy? When should I enter?"
Wrong question.
The question that actually determines whether you make money: "How much should I risk?"
Here's what I see constantly — someone finds a great setup, goes in with 10-20% of their account, and gets stopped out. One trade. Account down 15%. Now they need a 17.6% gain just to break even. Three bad trades in a row? Down 40%. Game over.
The fix is dead simple:
Never risk more than 1-2% of your account on a single trade.
That means if you have a $10,000 account and your stop loss is $5 away from entry, your position size is:
($10,000 × 0.01) / $5 = 20 shares
Not 200. Not "however much I can afford." Twenty.
"But that's boring. I won't make any money."
Wrong again. Here's the math:
Risk 1% per trade
Average 3:1 reward-to-risk
Win 40% of the time (which is conservative)
After 100 trades: +80% return on your account. While never risking more than 1% on any single trade.
The traders who survive aren't the ones who hit home runs. They're the ones who never blow up.
This is what we teach inside Signal Vault — not just what to trade, but how to trade it without destroying your account.
