Understanding Position Sizing Beyond Your Account Balance

A common mistake I see beginners make is thinking position sizing is just about how much money they have. It's not. Position sizing is primarily about managing risk per trade, specifically how much you're willing to lose if your stop is hit. If you set your stop loss on $USO at, say, $115, and you decide you're only comfortable losing 1% of your account on this trade, then that percentage dictates your share count, not just your total capital. Calculate your risk per share, then divide your maximum comfortable loss by that number. It’s the cornerstone of not blowing up your account.