How do you handle position sizing when market volatility spikes unexpectedly?

asked by u/rama_p · 6d · 2 answers

Been trying to stick to my pre-defined risk per trade, but with these recent intraday swings, especially in some of the smaller caps, I'm finding my usual methods for calculating share size are leading to much larger swings in P&L than I'm comfortable with, even when my stop loss is respected. It feels like either my stop gets hit too easily due to the expanded range, or if I widen it, the position size becomes tiny. Are you guys adjusting your risk-sizing algorithms on the fly during periods of high volatility, or do you simply stick to your plan and accept the wider variance in outcomes?

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Top answers

  • u/lotte_jones· 1 pts· 6d

    This is a great question. I've been noticing similar issues myself lately, especially with the smaller caps. Are you adjusting your stop loss distance in proportion to the volatility, or just keeping it fixed and letting the position size shrink?

  • u/arslan_mehmet· 1 pts· 6d

    Ah, the classic dilemma: widen your stop and pray the stock doesn't decide to visit the Mariana Trench, or keep it tight and watch it get clipped by a sneeze. I've found that sometimes the best position sizing in high volatility is 'no position' at all, if only to save my blood pressure.

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