Hey everyone, wanted to quickly touch on position sizing, especially relevant when looking at something like $EM which can swing pretty hard. It's basically determining how many units of a security you'll buy or sell based on your risk tolerance and the trade's stop-loss point, not just how much capital you have; a smaller position makes sense if your stop is further away to keep your dollar risk constant.
That's a solid point. With emerging markets, the volatility factor often gets underestimated until a significant swing, making a dynamic position sizing approach crucial. Do you primarily use ATR for setting stops, or a fixed percentage of your account?
That's a really solid point about adjusting position size based on stop-loss distance, especially crucial with something as volatile as EM. It's not just about managing the percentage of your portfolio, but the actual dollar risk per trade.
This is a fundamental concept, yet many traders seem to overlook it, especially when diving into more volatile instruments like EM. It's not just about capital allocation but about managing potential drawdowns systematically.
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