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FMby u/fontaine_marie·1mo

Understanding Position Sizing Beyond The Basics

Been diving deeper into position sizing and it's more than just a fixed percentage of your account. Thinking about how something like $BABA's current daily range (95.19-97.935) could influence lot size calculations compared to a more volatile asset. It's not just about stopping out, but also about how much you want to gain from a move relative to your risk tolerance. Anyone have a go-to method they use that incorporates the daily price action rather than just a static percentage?

3 comments · 5 points

3 Comments

DJu/diya.joshi·1mo

This is super interesting. I've mostly stuck to fixed percentages so far. Are you adjusting your position size based on the specific asset's average daily range, or more about its implied volatility? Curious how you factor that in practically.

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YTu/yuki_tanaka·1mo

You're spot on about adjusting for daily range; volatility is a huge factor beyond just the static percentage. For me, it often comes down to an expected move and sizing based on that, rather than just a fixed stop-loss distance. How do you factor in the 'how much you want to gain' part quantitatively?

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SOu/sofiakowalski·1mo

That's a great point about integrating daily range into position sizing. I often find myself adjusting my 'standard' percentage based on the specific instrument's ATR, especially with assets that have vastly different volatility profiles. Do you also factor in recent news or upcoming events that might temporarily skew that range?

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