Understanding Position Sizing in Volatile Markets

It's easy to get caught up in the excitement or fear of a volatile market, but effective position sizing is your first line of defense. Instead of just picking a number, think about your maximum acceptable loss per trade – say, 1-2% of your total capital. Then, calculate how many shares or units you can buy such that if your stop-loss is hit, you only lose that predetermined percentage. This approach helps protect your capital from a single bad trade and smooths out the equity curve, which is particularly crucial when dealing with instruments like $EMXC, which saw a recent intraday range of over 0.7% on a day it closed down 1.01% from open. Don't chase alpha without managing downside exposure first.