Learn the mechanics before the market charges tuition.

The 1% rule is not a magic number. It is a constraint that keeps a normal losing streak from becoming an account-ending event. At 1% per trade, ten consecutive losses cost about 9.6% of equity — painful, recoverable, and small enough that your judgement stays intact.

Calculate it in money, not lots: risk = account equity × 0.01. If the stop is 25 pips away and you trade EURUSD, one standard lot risks roughly $250. On a $5,000 account, your maximum size is about 0.2 lots.

Break the rule downward, not upward, when volatility is elevated (around news, or when ATR has doubled) or when the setup is new to you. Size is the only variable you fully control; the market controls everything else.

Track realised risk after every trade. A stop that filled 35% worse than planned because of slippage means your true risk was larger than 1% — adjust for that in the next position.

Every position size calculation has three inputs: the money you are prepared to lose, the distance to your invalidation point, and the value of that distance per lot. Get the third number from the contract specification, not from a forum.

For EURUSD, one standard lot is 100,000 units, so one pip is $10. A 30-pip stop therefore risks $300 per lot. For gold, one lot is 100 ounces, so a $3.00 move is $300 per lot. For US500, one lot is one index unit — a 30-point stop on one lot is $30.

Formula: lots = risk amount ÷ (stop distance in ticks × tick value per lot). If the result is below the minimum lot, either widen the account or skip the trade. Do not shrink the stop to fit the size.

Use the calculators page to check the arithmetic before you enter. After a few weeks the numbers become familiar, but the habit of checking is what prevents the 10x sizing error.

Most stops are too tight because they are chosen to fit a position size, not to invalidate the trade. The market does not know your lot size. Put the stop beyond the swing, the session high or the level that would prove the setup failed.

Once the structural level is set, measure the distance and let the position size fall out of it. If the resulting size is uneconomic, the trade is too expensive for the account — pass, rather than moving the stop closer.

Avoid round-number clustering where possible. Stops just beyond obvious highs and lows are where liquidity sits; give the position room beyond the level rather than exactly at it.

For intraday trades, add the spread and expected slippage to the distance. A 12-pip stop on a 1.5-pip spread is effectively a 10.5-pip stop after costs.

Leverage is a ratio between notional exposure and margin. At 1:1000, a $112,000 EURUSD position requires $112 of margin. The risk on that position is still determined by the stop, not by the margin.

Margin level = equity ÷ used margin × 100. At 100% you receive a warning; at 50% the platform starts closing the largest losing positions. A gap can jump past the stop-out level, which is why negative balance protection matters.

High leverage is useful when it lets you hold a correctly sized position without tying up capital. It is dangerous when it tempts you to hold a position that is too large for the account.

A practical rule: keep used margin below 20% of equity at all times. That leaves room for drawdown, swap and a second opportunity without a forced liquidation.

Record five fields on entry: setup name, why now, invalidation level, size and the emotion you noticed. On exit, record what happened and whether you followed the plan. The P&L is an output, not a verdict.

Review weekly, not daily. Look for repeated mistakes: entering before the level, moving stops, oversizing after a win. One repeated mistake is worth more attention than ten new strategies.

Separate good losses from bad wins. A loss taken according to plan is a cost of doing business; a win from a rule break teaches the wrong lesson and is more expensive over time.

Keep the journal short enough to complete in under a minute. A perfect template you abandon is worse than three fields you fill in every time.

Define four things: the markets you trade, the sessions you trade, the setups you take, and the conditions under which you do nothing. The last one is the most important and the most often omitted.

Write entry, stop and target rules in a way a stranger could execute. “Buy support” is not a rule. “Buy the retest of the prior day’s high after a London breakout, stop below the swing low, target 2R” is.

Set daily loss limits and a weekly stop. When the limit is hit, close the platform. The decision to stop is easier to make in advance than in the middle of a drawdown.

Review the plan monthly. Change one variable at a time and give it at least 30 trades before judging it. Strategy hopping is usually a discipline problem wearing a research costume.