Calculating Your Position Sizing

http://www.trading-secrets-revealed.com How do you calculate the right size trade? After setting your initial stop, you need a method for calculating your position sizing so you never risk more than your predefined maximum loss. There is a simple formula for calculating this: maximum loss / initial stop size = number of units to purchase. A basic but very powerful equation! Of course theres more to setting excellent position sizing. To find out more visit: http://www.trading-secrets-revealed.com

Comments

1. good question. does that mean that if you are under the 2% rule with 3 trades, are you trading 6% already?
2. Hi, I understand this based on a single trade but how does it work when going into multiple positions? When I place trade 1 based on the formula and then I want to place trade 2, do I base it off of the now available cash to trade? And if using the 2% rule (for loss), how does that work with a Margin account? Thanks