Position Sizing, otherwise known as risk management is an essential part of a trading plan. Without consistent risk management, there will not be
consistent results.
Just thought I would post a simple way to calculate your position size for Equities and Forex.
Equities: (Risk in $/stop size in in $) = Amount of shares to transact
Forex: (Risk in $/stop size in pips/9.85) = Lot size
Example:
Equities: Stock XYZ is at 60$ per share stop is 9$ away from your entry. Risk tolerance is $2000 per trade.
(2000/9) = 222 Shares.
Forex:
(100,000x2%)/67/9.85 = 3.00
consistent results.
Just thought I would post a simple way to calculate your position size for Equities and Forex.
Equities: (Risk in $/stop size in in $) = Amount of shares to transact
Forex: (Risk in $/stop size in pips/9.85) = Lot size
Example:
Equities: Stock XYZ is at 60$ per share stop is 9$ away from your entry. Risk tolerance is $2000 per trade.
(2000/9) = 222 Shares.
Forex:
(100,000x2%)/67/9.85 = 3.00