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What is position sizing in trading?

Risk Management

Position sizing is deciding how much capital to put into a single trade, based on your total capital, risk tolerance, and the trade’s stop-loss distance.

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    A common rule of thumb is risking only 1–3% of total capital on any single trade, so no single loss significantly damages the account. Getting position sizing right matters more to long-term survival than getting any individual trade’s direction right.

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