Position Sizing

Purpose

Determine how much to risk on a single position, so that a losing streak is survivable and no single idea can end the account. Position sizing determines survival; entry selection determines returns. Survival comes first.

When to Use

• Deciding how many shares or contracts to buy.
• Setting a risk-per-trade policy.
• Checking whether a position breaches concentration limits.
• Reviewing why a drawdown was deeper than expected.

Capabilities