Position Sizing and Stops in the Forex

Position sizing is the process of determining how much to invest, or risk, in any single trade. Position sizing is different for active trading, versus longer-term investing. In the case of short-term trading, it is usually a function of how much you could lose if the trade went bad.

In longer-term investing strategies, position sizing is a bit more complicated and may depend on the strategy at play. In this section, we will focus on sizing positions for short-term trades.