Understanding Position Sizing: Why It Matters More Than Your Entry

Too many traders obsess over the perfect entry point. While important, position sizing is arguably more critical for long-term survival. It’s the art of determining how many units of a given asset to buy or sell, based on your risk tolerance and the trade's setup.

Here’s a quick mental exercise: If you risk, say, 1% of your account per trade, and your stop loss is 50 pips away, you adjust your position size so that 50 pips lost equals 1% of your capital. This simple discipline ensures a single bad trade won't decimate your account, regardless of how often you are right or wrong. For example, on a $USDTHB long, if your stop is set at 33.51 from an entry of 33.648, that’s a 13.8 pip risk. Your position size would be calculated to make that 13.8 pips equal to your predetermined risk amount.