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PWby u/phongthep_worawit·5dQuestion

Struggling with position sizing vs. stop loss placement - advice?

Hey everyone, new here and trying to get my footing. Been paper trading for a few months now, and while I understand the theoretical side of risk management – defining risk per trade, setting a stop loss based on invalidation – I'm really grappling with the practical application of it, specifically with position sizing.

My issue is this: I'll identify a good setup, determine my stop loss level, and then calculate my position size to keep my risk within, say, 1% of my account. But often, the resulting position size feels either tiny, making the trade feel not worth it, or so large that I question the stop loss placement itself, even if it's technically sound. It's like I'm trying to force a position size to fit my risk tolerance, rather than letting the market tell me the risk. Is there a mental shift or a different approach to thinking about this that clicked for any of you seasoned traders? Do you ever adjust your stop if the calculated position size feels 'wrong' for the setup, or is that a rookie mistake?

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1 Comments

RHu/rana.hamdan·5d

Position sizing comes after your stop. Figure out your risk per trade percentage, then calculate your shares/contracts based on your entry and stop loss. That's the only way to do it right.

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