Understanding Position Sizing: Not Just How Much, But How to Lose Less

Alright, listen up. Position sizing isn't just about how many shares you buy; it's your primary risk management tool. You figure out your maximum tolerable loss on any single trade, then you work backward. If you're willing to lose, say, $100 per trade, and your stop-loss on $RBLX is set at $47.00 from your entry at $48.42 (meaning a $1.42 per share risk), then you can only buy 70 shares ($100 / $1.42 = ~70.4). This discipline stops you from blowing up your account on a few bad trades, which will happen.