What Is Position Sizing & How Do You Use It to Manage Risk?

No matter what kind of trading you may dabble in, there will always be some sort of risk to it. This risk increases when you’re trading highly volatile assets such as crypto. As such, many traders tend to employ crypto risk management strategies to ensure that any losses remain low. One of the most common crypto risk management strategies is position sizing. Read on to find out more about what position sizing entails, and how you can use it to manage risk.

Key Takeaways:

• Position sizing is a trading strategy in which the trader defines their entry price, exit price and overall risk before trading.
• If done correctly, position sizing can effectively help traders preserve their trading capital and ensure that they don’t blow out their account after a single trade.

What Is Position Sizing?