Position Size

What is Position Size?

Position size is an essential component of every trading strategy. For a given price movement, a greater position size will result in a higher profit or loss than a smaller position size. Risk management also heavily relies on position sizing. Profitability is affected by knowing when to execute larger or smaller deals and when to increase or decrease the size.

When one is in a successful position and there is an impending risk of the price moving against you, it may be a smart idea to reduce the size. Alternatively, when the risk to your position is very low and you wish to profit from the market's momentum during a quick move, it could be advantageous to raise the size.

Position sizing should be approached methodically by traders, based on the value of their account, the risk per trade, and an invalidation point.