Risk Management
Position Sizing
Quick Definition
The process of determining how much capital to allocate to a single trade based on risk tolerance and conviction.
In Plain English
The #1 rule of trading: survive to trade another day. Position sizing is how you protect yourself. Professional traders typically risk 1-2% of their account per trade.
Example
With a $10,000 account and 2% risk per trade, you'd risk $200 maximum. If your stop loss is 5% below entry, your position size would be $4,000.
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