{"id":29,"date":"2026-09-20T16:22:02","date_gmt":"2026-09-20T16:22:02","guid":{"rendered":"https:\/\/brokerspulse.com\/education\/risk-management\/"},"modified":"2026-09-20T16:22:03","modified_gmt":"2026-09-20T16:22:03","slug":"risk-management","status":"publish","type":"page","link":"https:\/\/brokerspulse.com\/en_gb\/education\/risk-management\/","title":{"rendered":"Risk management: position sizing and protecting your account"},"content":{"rendered":"
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Lesson 5<\/p>\n\n\n\n

2 min read \u00b7 Updated September 2026<\/p>\n<\/div>\n\n\n\n

Traders rarely fail for lack of a good entry. They fail because a few oversized losses erase many small wins. Risk management is the set of rules that stops that from happening.<\/p>\n\n\n\n

Rule one: fix your risk per trade<\/h2>\n\n\n\n

Decide in advance how much of your account you are willing to lose on a single trade. Many traders use 0.5% to 2%, and beginners often start at 1% or below. The number matters less than sticking to it.<\/p>\n\n\n\n

Position sizing formula<\/h2>\n\n\n\n

Lots = (account \u00d7 risk %) \u00f7 (stop distance in pips \u00d7 pip value per lot)<\/p>\n\n\n\n

Example: an account of US$5,000, risking 1% (US$50), with a 25-pip stop on EUR\/USD, where a pip is worth about US$10 per lot: 50 \u00f7 (25 \u00d7 10) = 0.20 lots. Check: 25 pips \u00d7 US$10 \u00d7 0.2 lots = US$50.<\/p>\n\n\n\n

Risk-to-reward and win rate<\/h2>\n\n\n\n

The win rate you need to break even depends on your reward relative to your risk (before costs): risk \u00f7 (risk + reward).<\/p>\n\n\n\n

Risk-to-reward<\/th>Break-even win rate<\/th><\/tr><\/thead>
1:1<\/td>50%<\/td><\/tr>
1:2<\/td>33%<\/td><\/tr>
1:3<\/td>25%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Spreads, commissions and swaps raise these numbers, which is why costs matter.<\/p>\n\n\n\n

Losses are harder to recover than they look<\/h2>\n\n\n\n
Loss on the account<\/th>Gain needed to get back<\/th><\/tr><\/thead>
10%<\/td>11.1%<\/td><\/tr>
20%<\/td>25%<\/td><\/tr>
30%<\/td>42.9%<\/td><\/tr>
50%<\/td>100%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Other rules that protect an account<\/h2>\n\n\n\n