01 / RISK
Your loss buffer is your capital.
Build position size and a daily stop around the buffer you can actually lose.
Find the loss floor first
Record current equity, the binding loss floor and remaining daily allowance. Use the smaller buffer and deduct a reserve for charges and execution. Advertised account size is not a risk budget.
Allocate the buffer
Choose how many full-stop losses your plan should tolerate before the session. Divide usable buffer by that number. This is a planning choice, not a universally optimal account-risk percentage.
Turn the setup stop into position size
Define where the setup is invalidated. Risk per contract = stop distance × money per point + estimated costs. Round position size down; if it is zero, skip the trade. Do not tighten the stop merely to fit a larger position.
Illustration: 2,000 buffer less 400 reserve leaves 1,600. Across 20 planned stop risks, that is 80 per trade. A contract with a 6-point stop, 5 per point and 4 in costs risks 34: at most 2 contracts, or 68. Slippage can increase the realised loss.
Before you trade
- Equity and loss floor match the dashboard.
- All values use one currency.
- Include costs, open positions and correlated trades.
Common mistakes
- Size risk from the advertised account balance.
- Widen a stop without reducing size.
- Treat correlated positions as independent risks.
BUILD YOUR RISK PLAN
Make the buffer tangible.
Use the smaller of the overall and daily remaining loss allowance. All money values must use one currency. These are planning assumptions, not a trade recommendation.
Round down. Do not widen your stop after sizing; include other open positions. Slippage can exceed your estimate.
RESEARCH & RULE CHECKS
Our examples are editorial planning frameworks. CME explains the relationship between stop distance and position size. FTMO illustrates why daily, overall and consistency rules must be read separately for the specific account.
CME / Position sizing ↗FTMO / Trading objectives ↗Continue building your process.
End the session on your terms.
Create a defined routine for entry, losing streaks and stopping for the day.
Open playbook ↗03 / PREPARATIONOne setup. Measurable repetition.
Test a precise trading idea before paying for a challenge.
Open playbook ↗06 / BEYOND EVALUATIONPassing is a transition.
Plan consistency, account changes and withdrawals with a separate rule sheet.
Open playbook ↗