// Definition
Position sizing is deciding how big a trade to take, so that if the stop-loss is hit you lose only a fixed, small part of your account.
Explained simply
A common rule is to risk no more than 1 to 2 percent of the account on a single trade. The position size then depends on how far away the stop-loss is: a wider stop means a smaller position.
Good position sizing keeps a losing streak survivable, which is what keeps traders in the game long enough to improve.
Tip
Decide the risk in money first, then calculate the size. Never pick the size first and hope the stop fits.
For education only, not financial advice. Trading is risky and you can lose money.