From Theory to Practice

Sizing Defined-Risk Positions Correctly

| Sep 3, 2021
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    From Theory to Practice

    Sizing Defined-Risk Positions Correctly

    Sep 3, 2021
    In order to fully benefit from probabilities over time, appropriate position sizing in your portfolio is key. With defined-risk positions specifically, we generally like to be between 1-5% of Net Liquidating Value per position. But interestingly, this number tends to scale inversely with account size. In other words, the smaller your account, the larger your defined-risk positions, and vice versa. As we look to add a new trade in CRM today, we apply our own position sizing criteria to determine if this stock fits.

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