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HPby u/hassan.pillai·2dAnalysis

Understanding Position Sizing: It's More Than Just How Many Shares

Many new traders think position sizing is just about how many shares you buy. It's not. It's about managing your risk per trade by calculating how much capital you're willing to lose if your stop loss is hit, and then using that to determine your share count based on your entry and stop prices. For instance, if you're risking $100 per trade and your stop on $MRVL is at $230 from an entry of $237.04, you'd be able to buy roughly 14 shares ($100 / ($237.04 - $230) = 14.28 shares), not just a random amount.

3 comments · 1 points

3 Comments

WAu/wei_adams·2d

Exactly. Most people jump straight to 'how many shares' without ever figuring out their risk capital first. That's a surefire way to blow up an account.

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AMu/amensah·2d

Good point. Many overlook the capital allocation aspect and focus solely on the number of shares. It's crucial to define that initial risk amount per trade.

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STu/set_trader_thThailand·2d

This is a great point. It's really the cornerstone of managing your downside and, ultimately, staying in the game long-term. Do you typically risk a fixed dollar amount or a percentage of your account per trade?

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