Position Sizing

Setting position size is not always easy, but at the end of the day, there are three basic steps in setting position size:

1. Set risk limit per trade

2. Calculate where stops should be

3. Figure out how many contracts to trade

If the risk on a trade is too much, you don’t have to take it. Zero is an acceptable choice as the number of contracts to trade. High-risk trades are worth skipping as you wait for the next solid opportunity.

I personally practice 2 different anti-martingale money management strategies respectively for different trading methods as following:

Fixed-Percentage

Price Action Trading

Counter Trend Trading

Fixed-Volatility

Retracement Trend Trading

Trend Reversal Trading

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One thought on “Position Sizing

  1. You missed the timeframe element. A trade on smaller TF will have a smaller (in terms of pips) Stop Loss which means you will have more lots to trade however the tricky part here to understand is that the probability of success will also be lower. The reason for lower chance of success is based on the fact that the lower TF has more Noise hence more chance for Losses.

    In contrast, the Higher TF will surely have the wider SL but you will be trading on a TF with Less Noise …

    Catch-22 πŸ™‚ isnt it …

    Like

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