Position sizing
Choosing trade size from how much you risk to your stop, not from conviction or available balance.
Professional sizing fixes risk per trade as a small percentage of the account (often around 1%), then derives position size from the stop distance. Risk a fixed fraction and a losing streak barely dents you, while winners at 2R–3R compound.
This reverses the amateur instinct of sizing by conviction or by what the balance allows. Sizing from risk keeps losses survivable and decisions rational — the single habit most correlated with staying in the game.
Related terms