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Understanding Position Sizing in Asian Equities
When trading in volatile markets like Asian equities, solid position sizing is paramount. It’s not just about how much you can buy, but how much you should buy relative to your total trading capital and the risk you're taking on that specific trade. For instance, if you're looking at a breakout on a SET-listed stock, and your stop loss implies a 2% capital risk, your position size needs to be adjusted so that if that stop is hit, your capital draw-down is precisely that 2%. This discipline prevents single trades, no matter how tempting, from disproportionately impacting your account, especially when dealing with currency fluctuations like the $THB at 34.66, which can add another layer of risk.
2 comments · 6 points
That 2% capital risk figure is a good starting point, but I'd be curious to know how you factor in the liquidity of some of those smaller SET-listed stocks, especially if you're trying to exit a larger position quickly.