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POSITION SIZING

How much quantity should be taken, determine the stop loss and allowed risk.

Published by The Retail Trader · JUL 31, 2026 · Risk Management

Position Sizing — How much quantity to take, based on the stop loss threshold and allowed risk. This is the real tool of risk management.

WHERE THIS FITS IN

This term comes under Risk Management, in the section "ACCOUNT-LEVEL RISK". The survival of the entire account depends on numbers, not just one trade:

RELATED TERMS TO READ

Other terms in this group — understanding them together is more useful:
• Risk Per Trade
• Capital Allocation
• Exposure
• Leverage
• Margin Call
• Max Daily Loss
• Drawdown
• Max Drawdown
• Recovery Math
• Risk of Ruin

To read the entire group and all its examples at one place, see the journal "RISK MANAGEMENT: DICTIONARY OF AVOIDANCE" - this term has been taken from there.

This entry is for educational purposes only and is not a recommendation to buy or sell. Exchanges change charges, margins, lot sizes and expiry rules from time to time, so verify any figures with your broker or exchange.

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