Position sizing
How much, given where the stop is
What it is
Size chosen so that the distance to invalidation costs a fixed, small share of the account, commonly quoted as one or two percent.
What it may suggest
Size, not entry precision, is what determines survival. Sizing from the stop rather than from conviction keeps losses uniform.
Where it fails
Conviction is the enemy here. The trade you feel most certain about is exactly where oversizing tends to happen, and one oversized loss undoes many disciplined wins.
Also called sizing, risk per trade.
More concepts
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