Understanding Position Sizing Beyond 'X% of Account'

It's easy to say "risk 1% of your account per trade," but true position sizing is more nuanced. It factors in not just your total capital, but also your chosen stop-loss distance for that specific trade. For example, if you're looking at a $AUDNZD move with a wider stop than usual due to current volatility, your actual dollar risk might be the same, but the number of units you can afford to trade will be significantly lower. This is crucial for managing drawdowns effectively, especially with more volatile assets like $AAVE where price swings can be quite sharp even within a day's range of 88.10-89.65.