Position Sizing
Position sizing is about controlling how much of your account you risk per trade. Proper sizing keeps losses manageable and protects your capital.
💡 Risk only a small percentage of your account per trade (1–2% recommended).
Calculate Your Risk Amount
Decide how much money you are willing to lose if a trade hits your stop loss.
📉 Example: If you have $10,000 and risk 2%, your max loss per trade = $200.
Determine Trade Size
Use the formula: Position Size = Risk Amount ÷ Trade Risk in $.
📊 Example: Stop loss is $2 away from entry → $200 ÷ $2 = 100 shares/contracts to buy.
Adjust for Stop Loss
Always make sure the position size respects your risk limits, even if the market moves against you.
🔥 Never risk more than your planned percentage on a single trade.
Consistency is Key
Position sizing is a discipline. Stick to it even during winning or losing streaks.
💡 Proper sizing allows you to survive losing streaks and stay in the game.