Risk management · Glossary
Position size
The quantity or notional exposure of a trade.
Definition and explanation
Position size is the amount of an asset or contract held in a trade. A risk-based approach derives size from account equity, the amount willing to be lost if a stop is reached, and the distance between entry and stop. Fees, slippage and contract specifications can change the realised risk.
Example
If the planned loss budget is $20 and the entry-to-stop loss is $2 per unit, a simplified calculation gives a position size of 10 units before costs.
Educational information only. Trading terms and contract mechanics can vary by venue and market. Verify the rules of the provider you use.