You have $10 at a cookie shop and want 20 cookies. Your $10 is the most you can lose, and the 20 cookies are your stop. The price of each cookie is your lot size. Drag the price until the bill is exactly $10.

Position size means how big your trade is. It is the lot size you pick before you click buy or sell. A bigger trade means bigger wins and bigger losses.

A stop closes your trade for you if price moves against you by a set distance. Buy gold at 4,150.00 and set your stop at 4,148.00. That is 20 pips away.

Decide the most you are okay losing on one trade. $10 is just an example. The number is yours, and starting small is smart.

Split that amount across the pips to your stop. $10 across 20 pips is $0.50 for each pip.

On gold, a 0.01 lot costs about $0.10 a pip. You want $0.50 a pip, which is five times more, so use a 0.05 lot. Check: 20 pips at $0.50 is $10. These numbers are examples, so check your broker.

Keep the same $10 limit. A 10 pip stop allows 0.10, a 20 pip stop allows 0.05, and a 50 pip stop allows 0.02. The wider the stop, the smaller the size.

Even good traders lose several trades in a row. On a $1,000 account with a 20 pip stop, five losses at 0.05 cost about $50. Five losses at 1.00 cost about $1,000, which is the whole account. Your size decides how long you last.

Sometimes the answer lands between two sizes. With a $10 limit, a 0.02 lot risks about $8, but a 0.03 lot risks about $12. That is over your limit. Pick the smaller one: round down, never up.

Decide your loss, check your stop, pick the size and round down. Choosing your risk as a percent comes later, in Risk Management.