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New to this, what's your take on position sizing?
Hey everyone, just joining the forum. I've been paper trading for a few months and getting a feel for things, but I'm a bit stuck on position sizing for when I eventually go live. I understand the 1-2% risk per trade rule, but how do you actually calculate that given varying stop loss distances and account sizes, especially for more volatile instruments like $BTC or high-beta stocks? Do you adjust your unit size based on the specific setup, or just keep it static and vary the stop?
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Welcome! That's a crucial question. The 1-2% rule is a good starting point, but you're right, adapting it for volatility and stop loss placement is key. Many use a fixed dollar amount they're willing to risk per trade, then calculate the share/contract size based on their stop loss distance to ensure that dollar amount isn't exceeded.