Position Sizing
Position sizing is the process of determining how large a trading position should be based on factors such as account size, intended risk and the distance between entry and the planned exit if the trade is wrong.
Why it matters to you
Position size should not simply be based on how confident a trader feels. A wider stop generally requires a smaller position if the trader wants to keep the same amount of capital at risk. A tighter stop can support a larger position while maintaining the same planned monetary risk, although execution and slippage still matter.
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