Lesson 1 of 12 · Foundations

The Foundations

Pips, lots, leverage, and the one rule that keeps traders alive — every idea drawn, and every idea wired to how your own bot makes decisions. Amber terms are tappable.

1.1What you're actually buying

When you trade , you're not buying a thing — you're backing an opinion: "the euro will strengthen against the US dollar."

A pair is a price tag: how much of the quote currency buys one unit of the base.

Every trade has two sides. BUY (go ) profits if the price rises. SELL (go ) profits if it falls. In FX you can profit in both directions — falling prices aren't "bad", they're just a different trade.

In your system

The Direction line on every IronGate recommendation card (BUY or SELL) is exactly this choice, and the "why this pair" paragraph is the evidence for it.

1.2The pip — how price moves are measured

A is the standard unit of price movement. Find it by counting to the 4th decimal place:

Everything in trading is priced in pips: stops are "25 pips away", spreads "cost 1.1 pips".

Rough feel for scale · EURUSD

A quiet hour drifts 3–8 pips · a normal day ranges 60–100 pips · a big news event can jump 50+ pips in minutes.

1.3The lot — how size is measured

A is the unit of trade size: 1 lot = 100,000 units of the base currency. What matters day-to-day is what each size makes a pip worth — the :

Pip value bridges "the market moved 25 pips" and "I made or lost $X". At 0.02 lots, 25 pips = $5.

1.4Leverage — the loaded word

lets you control a big position with a small deposit (). Here's what 30:1 actually looks like:

The reframe that matters: leverage sets the deposit. Risk comes from position size — the next section.

A trader risking 1% per trade at 30:1 leverage is in exactly as much danger as one risking 1% at 5:1. The blown accounts you hear about come from oversized positions, not from leverage itself.

The golden rule

Risk a fixed, small percentage of your balance on every trade — 1% or less while learning. Ten straight losses at 1% ≈ −9.6%: annoying, survivable. At 10% per trade, the same streak destroys 65% of your account. Survival is the strategy.

1.5One trade, fully drawn

A closes your trade automatically at a fixed loss; a closes it at a fixed gain. Both are decided before you enter. Here's an entire BUY trade in one picture:

The SL isn't an admission of failure — it's the price of finding out whether you were right. The two distances give the .

1.6How your bot sizes every trade

Now the payoff. This is the actual logic from python/risk/position_sizer.py — the code that decides the lot size of every trade IronGate recommends:

# IronGate · PositionSizer (the real thing) risk_amount = balance × risk_pct lot_size = risk_amount ÷ (sl_pips × pip_value) # e.g. $10,000 balance, 1% risk, 20-pip stop: risk_amount = 10,000 × 0.01 = $100 lot_size = 100 ÷ (20 × $10) = 0.50 lots

In plain English: "I'm willing to lose $100. My stop is 20 pips away. What size makes a 20-pip loss equal exactly $100?" The size is the output of the risk decision — never the starting point. That single inversion separates systematic traders from gamblers.

⚙ Try it — your bot's exact formula, live

Account balance ($)

Risk per trade (%)

Stop loss (pips)

Pip value per lot ($)

0.40

Play with it. Notice: a tighter stop allows a bigger position for the same risk; a wider stop forces a smaller one. Your dollar risk never moves — that's the whole point.

1.7See it on your own screen

Next time you're at your PC, two things to find — here's exactly where to look:

MT5's Toolbox panel (bottom of the window, Trade tab). Put this real balance into the calculator above — that lot size is what your bot would trade today.

And the one number that throttles everything you learned in this lesson lives in python/config/risk_params.yaml:

# python/config/risk_params.yaml risk: risk_pct: 1.0 ◀── the golden rule, as one line of config max_daily_drawdown: 5.0 sl_mode: ATR_BASED