Understanding Position Sizing in Volatile Markets
Too many new traders blow up their accounts by not grasping position sizing, especially in volatile assets. It's not just about how much you're willing to lose per trade; it's also about managing your overall portfolio risk. For example, if you're looking at something like $DOGE, currently around $0.07007, and you allocate a huge chunk of your capital to it without understanding the daily swings (today it's already moved between $0.0699 and $0.0708), you're asking for trouble. Even with a stock like $KWEB at $28.06, which is less volatile but still carries significant headline risk, your position size needs to reflect your risk appetite relative to your total capital, not just your conviction in the trade. Overleveraging on any single position, regardless of the asset, is a surefire way to get wiped out when the market moves against you.
It's almost as if some people view position sizing as a mere suggestion rather than a fundamental law of not going broke. Especially when the 'asset' in question has more bark than bite, if you catch my drift.