Position Sizing FAQ (20 Questions)
Quick answers to the most common position sizing questions: stop-loss, leverage, futures margin, risk %, and sizing mistakes.
Should I pick leverage or size first? Answer
Size first, leverage last.
What risk % should beginners use? Answer
Often 0.25% to 0.75%.
Does leverage change my risk? Answer
Not if you size correctly; it changes liquidation.
What if my stop is very tight? Answer
Fees and slippage become critical.
Can I trade multiple positions at once? Answer
Yes, cap total open risk (2R to 4R).
What if I move my stop? Answer
Recalculate size or accept changed risk.
What if I don't use a stop? Answer
You can't define risk; position sizing breaks.
Is a 1:3 R:R always better? Answer
Not necessarily; expectancy matters.
Do I include fees in risk? Answer
Include fees in net PnL; add buffer to small targets.
What is notional? Answer
True exposure: units x price.
What is margin? Answer
Collateral required to hold the position.
How far should liquidation be from entry? Answer
Far beyond stop, with buffer.
What is open risk? Answer
Total risk if all stops are hit.
How to handle correlated trades? Answer
Reduce risk or cap count.
Can I size by volatility? Answer
Yes (ATR stops), size adapts automatically.
How to journal position sizing? Answer
Track risk amount, stop distance, units.
Why does my backtest outperform live? Answer
Slippage and execution costs.
Should I scale in or out? Answer
Yes, but track average entry and risk.
Is "risk-free" after moving stop to BE real? Answer
Not fully (slippage exists).
What is the simplest sizing workflow? Answer
Risk -> stop -> size -> costs.
Tools: