One: decide what you are willing to lose
A percentage of the balance, chosen before you look at a chart. This is the only number in the whole process that is entirely yours to choose, and everything else follows from it.
Two and three: pick the pair, find where you are wrong
Choose an instrument you understand the contract size of. Then find the price at which the reason for the trade no longer holds. That price is your stop, and it comes from the chart, not from a round number of pips.
Four: size the position
Your risk and your stop distance produce exactly one lot size. Use the calculator rather than estimating. If the answer is smaller than the platform allows, the trade is not available to you at this account size.
Five, six and seven: place it, leave it, record it
Enter with the stop and target attached, so the trade is complete before it starts. Then leave it alone until one of them is hit. Then write down what you did and why, while it is fresh — that record is the only thing that makes the next hundred trades better than the first.
In short
| Step 1 | Decide the risk in money |
|---|---|
| Step 2 | Find where the idea is wrong |
| Step 3 | Calculate the position size |
| Step 4 | Enter with stop and target attached |
| Step 5 | Record it |
Common questions
How much money should I start with?
An amount you can lose entirely without it changing anything about your life. That is the only correct answer, and it is deliberately not a number.
What if my first trade loses?
Then the process worked as designed: a planned loss, inside a limit you chose. A losing trade taken correctly is a better outcome than a winning trade taken by accident, because only one of them can be repeated.
Should I start on demo or live?
Demo until the platform holds no surprises and you can follow your own rules. Then live, at a size small enough that the first bad run is affordable.
Trading forex and CFDs on margin carries a high level of risk. Most retail accounts lose money. Nothing on this page is financial advice or a recommendation to trade.