Position size: how to calculate it from your risk and stop loss

Position size is the number of units of an asset you buy or sell in a trade. It is calculated from risk, not from gut feeling: size = (capital × risk percentage) / |entry price − stop loss price|. First you decide the most you can lose on the trade, then you choose the position size so that the stop loss corresponds to exactly that amount.

A purely numerical example: a risk of 50 units and a stop loss 5 units from entry give a position of 10 units. The risk percentage per trade is your own decision, not a recommendation. It is a mistake to set a position based on the level of leverage or on the amount you want to earn. Remember that with slippage, the actual loss can exceed the planned one.