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Dunn To PerfectionFoundation

Risk Management · Module 1: Risk Foundations · Lesson 4

Position Sizing

Beginner 6 minLesson 4 of 15

Learning objectives

  • Explain position sizing in plain language
  • Understand why it matters to markets
  • Recognise a common misconception

The concept

Size = risk amount ÷ stop distance. It's the bridge between your risk rule and the market.

Why it matters

It keeps losses consistent regardless of .

How markets interpret it

Wider stops require smaller positions.

Key takeaways

  • Wider stop → smaller size.
  • Try the calculator.

Knowledge check

If your stop distance doubles, to keep risk constant your size should…

Key terms · hover or tap for a definition

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