Understanding Position Sizing Beyond 'What I Can Afford'

Too many new traders equate position sizing with simply how much capital they have available. That's a mistake. True position sizing is about managing the risk on a single trade in relation to your overall account, typically defined by a percentage of your capital you're willing to lose if your stop-loss is hit. For instance, if you're risking 1% per trade on a $10,000 account, that's $100. If your stop on a $USDTHB long is at 33.20 and your entry is 33.29, you know exactly how many units you can take to keep that $100 risk, regardless of the instrument's volatility or price. It's a critical component for long-term survival, especially when $USDTRY is seeing volatility like its current 46.8043–46.99384 range.