Position Sizing
Determining capital allocation per trade
What is Position Sizing?
Position Sizing The process of determining how many contracts or how much capital to allocate to a single trade relative to total portfolio size. Proper position sizing limits the damage from any single losing trade. Common guidelines include risking no more than 1-5% of portfolio value per trade and limiting total portfolio delta and theta exposure.
Complete Definition
The process of determining how many contracts or how much capital to allocate to a single trade relative to total portfolio size. Proper position sizing limits the damage from any single losing trade. Common guidelines include risking no more than 1-5% of portfolio value per trade and limiting total portfolio delta and theta exposure.
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