What is position sizing and how does it affect performance?
Position sizing is the methodology a trader or manager uses to determine how large a trade or position to hold at any given time. Trading signals, automated systems, and most educational approaches place a disproportionately large weight on market entry and exit points therefore failing to recognize the impact position sizing has on overall risk levels and the success of a given strategy. SFX Markets goes to great lengths to ensure that a trader’s “style” is such that the position sizing rules sensibly match up with per-trade risk limits, margin settings, and stop-loss or take-profit levels.
