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Even with correct position sizing, investors may perhaps lose more than their specified risk limits if a stock gaps below their stop-loss order.



Position size is calculated according into the risks you happen to be willing to accept on that single trade (percentage of your entire portfolio you are willing to lose), portfolio size, stock entry price and stop-loss price (the utmost loss you will incur in the event you liquidate your position).

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The size of your position is determined through the risk per trade you take. It will tell you the number of shares, a lot, or contracts to order or sell for every trade. How much should you risk per trade?

As a result of psychological aspects, along with the increasing risk traders' den associated with increasing trading volumes, many traders fail to increase their position size successfully.

I like how your articles have the theory behind the topic, and also use real numbers and equations so that it is easy for us to apply the information to our very own trading.



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