Glossary › position sizing
Trading glossary · risk
position sizing
Working out how many shares or coins to buy so that if your safety exit is hit, you only lose a small, set amount.
The fuller meaning
Setting trade size from the stop: size = money at risk ÷ distance from entry to stop (times value per point for futures and forex). Stop first, size second; a wider stop means a smaller position for the same risk, and sizes are rounded down to whole units.
position sizing, also called position size.
Related words
1% rule · ATR stop · average loss · average win · breakeven · breakeven win rate · correlation · daily loss limit · drawdown · equity curve