Start with a loss budget
Position sizing translates an idea into a financial exposure. The starting question is not “How much could I earn?” but “How much can this decision lose?” Decide an absolute risk budget using money that is not needed for living costs. There is no universal safe percentage.
For a hypothetical $1,000 learning account, a chosen $5 risk budget represents 0.5% of the current balance. That is an arithmetic example, not a recommendation. If the platform's minimum trade exceeds your budget, the trade does not fit. Increasing the budget to satisfy the platform reverses the logic.
Different products need different calculations
For an unleveraged position with a planned stop, a simplified size is loss budget divided by the distance between entry and stop. With a $5 budget and a $0.25 per-unit distance, the result is 20 units before commissions and a slippage allowance.
A stop is not a guarantee: gaps or illiquidity can cause a worse execution. Derivatives require attention to contract multipliers, margin and leverage. For a binary option that loses the full stake, the stake itself is generally the loss amount. Do not apply the stop-distance formula to it.
Count overlapping exposures
Three open positions are not necessarily three independent ideas. Positions tied to the same currency, index or news event can lose together. Several signals on the same asset can be repeated exposure to the same underlying move.
Add up the amounts at risk across open positions and pending orders. Set a total exposure ceiling as well as a per-trade limit. For fixed-expiry contracts, include every unsettled stake rather than counting only the most recent one.
Do not resize to repair a feeling
After a loss, the temptation is to increase size to return to the previous balance. After a win, it is to treat profit as free money. Both shift sizing from a written rule to an emotional reaction. Account equity does not remember your preferred starting point.
Drawdowns also have asymmetric recovery math: a decline from $100 to $80 is a 20% loss, but returning from $80 to $100 requires a 25% gain. Reducing exposure or stopping is often more useful than demanding a fast recovery.
Try this on paper
Create a paper exposure sheet with balance, chosen loss budget, minimum trade size and total open risk. Work through the $5 budget / $0.25 stop-distance example, then add fees and a hypothetical slippage allowance. Separately size a full-stake-loss binary contract. Write when you would refuse both trades.