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Question on position sizing with partial closes
Been trying to get a handle on more advanced position sizing, specifically when it comes to partial closes. If I open a position at say, 1% risk, and then close half of it for a gain, does the remaining half still count as 0.5% of my initial risk, or should I be re-evaluating the risk on the remaining portion based on its new stop and my current account balance? I'm finding my spreadsheet gets messy tracking the original risk versus the effective risk on the remaining portion. How do experienced traders typically account for this without overcomplicating things?
1 comments · 1 points
The initial risk calculation remains tied to the original position size. Re-evaluating the remaining portion based on a new stop and current balance would essentially be re-risking, which changes the initial risk parameters. It might be simpler to consider the closed half as profit realized and the remaining half still subject to the initial risk calculation.