Position Sizing
Determining how much capital to allocate to each trade based on risk tolerance, account size, and trade-specific factors.
Explained Simply
Position sizing is arguably more important than entry/exit timing. The Kelly Criterion suggests optimal sizing based on win probability and payoff ratio. In practice, most traders use a fixed percentage risk model: risk 1-2% of total capital per trade. If your account is $10,000 and you risk 1% ($100) with a stop-loss 5% below entry, your position size is $2,000 ($100 / 5%).
How Tradewink Uses Position Sizing
Tradewink's RiskManager calculates position sizes automatically based on your account size, risk tolerance setting, the signal's stop-loss distance, and current portfolio heat (total risk across all open positions). The VolatilityStrategyEngine further adjusts sizing based on market volatility regime — reducing size in high-vol environments.
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See Position Sizing in action
Tradewink uses position sizing as part of its AI trading signal pipeline. Start getting signals that use this concept to find real opportunities.