Calculating Position Sizes

The importance of calculating the correct position size to use with each and every trade you take cannot be under estimated. Position size directly impacts how much we choose to risk on each trade so it's probably the most crucial elements to make sure you get right when putting on a trade. Risk management is what keeps traders alive in the markets as without it, a trader would be very likely to lose their whole entire trading account. Do you know exactly how to calculate your correct position sizes?

To be able to control your risk you need to have a defined exit point if the trade goes against you, we call this a stop loss. The stop loss must be figured out ahead of time, not once you have entered into a trade. To figure out what position size you limit yourself to, you must have a predefined entry and exit point to your trade. Once you now these two figures, you can then confidently calculate your position size. Continue reading Hao's article on how to correctly calculate your position sizes by clicking here.

The TWP Team