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Investment
Position Sizing
Deciding exactly how much money to risk on each trade based on your account size and stop-loss distance.
Proper position sizing is what separates professionals from gamblers. It prevents one bad trade from destroying your account. Most successful traders never risk more than 1–2% on any single trade.
It's choosing how big a step you take so you don’t fall over if the path gets slippery.
Real world: With a £10,000 account and a rule to risk only 1% per trade (£100), you calculate how many shares or lots you can buy so that if the stop-loss is hit you lose exactly £100. This keeps losses small and consistent.
💡 Position sizing is the single most important rule that keeps traders alive long enough to become good.