Live OANDA:EURUSD Chart — Example
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The 1-2% Rule
The golden rule of risk management: never risk more than 1-2% of your total account on a single trade.
This means if you have a ₹50,000 account, maximum loss per trade = ₹500-₹1,000.
Why? Because even the best traders have losing streaks. With 1% risk, you can lose 20 trades in a row and still have 80% of your capital intact. Risk 10% per trade and 5 losses wipes 40% of your account.
Position Size Calculator
The formula for correct position sizing:
Lot Size = (Account × Risk%) ÷ (SL in pips × Pip value)
Example: Account = ₹1,00,000 | Risk = 1% = ₹1,000 | SL = 20 pips | Pip value = ₹83 (for 0.1 lot EUR/USD)
Lot size = 1,000 ÷ (20 × 83) = 1,000 ÷ 1,660 = 0.06 lots
| Account |
Risk % |
Risk Amount |
SL 20 pips |
Lot Size |
| ₹50,000 |
1% |
₹500 |
₹83/pip per 0.1 |
~0.03 lots |
| ₹1,00,000 |
1% |
₹1,000 |
₹83/pip per 0.1 |
~0.06 lots |
| ₹5,00,000 |
1% |
₹5,000 |
₹83/pip per 0.1 |
~0.30 lots |
| ₹10,00,000 |
1% |
₹10,000 |
₹83/pip per 0.1 |
~0.60 lots |
Stop Loss Placement
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Rule 1: Always place your SL BEFORE entering the trade — never trade without an SL
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Structural SL: Place SL just beyond the nearest swing high/low — beyond where your setup is invalid
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ATR-based SL: Use 1.5x ATR (Average True Range) to account for normal market noise
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Never move SL wider: If price is approaching your SL, that means your analysis is wrong — let it hit
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Move to Breakeven: Once price moves 1:1 in your favour, move SL to entry price — free trade
Pro Tip: Your stop loss placement determines your position size. If you need a wide SL, reduce your lot size to keep risk at 1-2%. Never widen the SL — reduce the lot size instead.
Drawdown Management
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Normal Drawdown: 0-10% — business as usual, continue trading normally
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Warning Zone: 10-20% — review your trades, reduce position size by 50%
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Danger Zone: 20-30% — stop trading for 1 week, review your system completely
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Critical: 30%+ — stop trading, go back to demo, rebuild your strategy
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The math of recovery: 50% loss requires 100% gain to recover. Protect capital at all costs.