Position Sizing

Risk Management

How much money you put into each trade - the #1 risk management tool. The process of determining how many shares or contracts to trade based on account size and risk tolerance. Proper position sizing is what separates professionals from amateurs. Example: You have $50,000. Risking 1% per trade means risking $500. If your stop loss is $5 away, you can buy 100 shares. This math, done BEFORE every trade, prevents catastrophic losses.