How to Size a Trade Before the Stop

The three numbers, in the order they are found

A trade's size is made of two numbers, so it comes last. First the money the trade may lose, 100 dollars, one per cent of a 10,000-dollar example account. Then the distance to the stop, read off the chart, 25 pips from 1.17166 to 1.16916 on the euro against the dollar, its 10:15 close on 17 December 2025. Last the size, 100 over 25 times 10, or 0.40 lot — a lot being 100,000 euros, worth 10 dollars a pip. Reverse the order and the rule breaks: a size of 0.40 picked first, and then a stop the chart puts 60 pips away, is 240 dollars at the stop, 2.4 per cent, and the stop must either move to fit the size or be left to break the rule.

Measure the room before buying the carpet

Picture a room being measured before the carpet is bought. The carpet is cut to the room; nobody buys the carpet first and then looks for a room it fits. The stop's distance is the room, and the size is the carpet. The distance comes from the chart, where the trade is wrong, in pips or dollars from the price, and it is measured before the order window is opened. The size is then cut to it, so that the money at the stop is the money the account allows. A carpet bought first has a way of turning out to be the wrong size for every room it is tried in.

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