Position size: how much on one trade

Summary

Position size is how big a trade is. Many traders set it from the loss they accept rather than from how sure they feel: for example, never risking more than 1% of the account on one idea. If the stop-loss is far away, the position gets smaller; if it is close, it can be bigger. This keeps every loss about the same size whatever the trade.

Key points

• Set the size from the loss you accept, not from confidence.
• A common rule: risk a small, fixed share of the account per idea.
• A wider stop means a smaller position.

Check yourself

If your stop-loss has to be further away, what should usually happen to the position size?

Practice