Position Sizing: Risk First, Size Second

Every sizing mistake in trading is the same mistake: choosing size first and discovering risk later. The desk runs the math in one direction only.

The formula

1. Account risk per trade:  R = account × risk%        (e.g. 1,000 × 1% = 10)
2. Stop distance:           D = |entry − SL| / entry    (e.g. 75800→75150 = 0.86%)
3. Position notional:       N = R / D                   (10 / 0.0086 ≈ 1,163)
4. Leverage is an output:   margin you allocate decides it, not vanity

Read step 3 twice. The SL the signal hands you sets the stop distance, and the stop distance sets the notional. A tight structural stop allows a bigger position for the same dollar risk; a wide stop demands a smaller one. The risk stays constant. The size breathes.

Volatility sizes the trade, conviction does not

Two LEGENDARY signals are not equal sizing events. When ATR is violent, stop distances widen and the formula automatically shrinks your notional — obey it. The tier measured evidence quality; the ATR measures how hard you can be wrong while being right. Size answers to the second one.

The risk% knob

1% per trade is the classic desk default; aggressive books run 2%, learning accounts should run less. Whatever you choose: it is a POLICY, set when calm, never edited inside a trade. Changing risk% because you feel sure is just size-first sizing wearing a costume.

The formula's gift: any single loss is a known, planned, boring number. Losses stop being events. That is the entire psychological foundation the rest of your trading stands on.