Risk management is not a section of trading. It is trading. The decisions about how much to risk, and where to be proven wrong, determine whether you can keep going long enough to learn anything.
The idea in one sentence
Decide how much you are willing to lose on this trade, then work out how big the position can be so that if your stop is hit, you lose exactly that amount and no more.
Step 1: choose your risk percentage
Risk per trade is a percentage of your account. Many educators suggest keeping it small, often 1% or less, because it lets you survive a long run of losses. There is no universally correct number, but a very high one makes ruin likely. Pick a figure you can accept losing many times in a row.
Step 2: find the stop distance
Your stop goes where your idea is proven wrong, not where it is convenient. The distance between entry and stop is your risk per unit.
Step 3: calculate the size
A worked example
You have a £10,000 account and risk 1%, so the amount at risk is £100. You plan to buy at 1.0850 with a stop at 1.0820, a distance of 0.0030. The size is £100 ÷ 0.0030 = about 33,333 units.
If the stop is hit, you lose about £100, which is 1% of the account. If you widen the stop, the size gets smaller. If you narrow it, the size gets larger, but a stop that is too tight just gets hit by normal noise.
You can check any numbers with the free position size calculator.
What this does not include
The calculation ignores spread, commission, slippage and any leverage limit imposed by your broker. Real losses on a stopped-out trade can be slightly larger than planned, which is another reason to keep risk modest.