The 1% Rule & Ruin Math

You cannot control whether a trade works. You can control how much it costs you when it does not. That is position sizing, and it decides whether a bad month is a bruise or the end of the account.

Two numbers people mix up:

• Position size: how much money is in the trade. 50 shares of a $100 stock is a $5,000 position.
• Risk: how much you lose if your stop gets hit. Same 50 shares with a stop $4 lower: $200 at risk.