What is position sizing?

  • Position sizing is another word for the size of the transactions you are doing.
  • The larger your transactions (larger position sizing), the more difficult it becomes to make decisions because of its emotional impact and the risk of putting “all your eggs in one basket”.
  • Research has shown that one should not risk more than 6% as the winning traders did on average. [1] Applying this share trading principal (for position sizing) to crop marketing means 6% of a season's total harvest can be risked (sold) when a season's ideal profit goal is achieved.
  • Regardless of what is said,  it is important that you choose a position size for your transactions that you are comfortable with.

1.Ginyard, J. (2001). Position-sizing Effects on Trader Performance: An experimental analysis Uppsala University, Department of Psychology (Master’s thesis), Retrieved from https://www.turtletrader.com/position_sizing.pdf