From Theory To Practice - September 3, 2021 - Sizing Defined-Risk Positions Correctly

published 3 weeks ago by tastytrade, Inc.

In order to fully benefit from probabilities over time, appropriate position sizing in your portfolio is key. With defined-risk positions specifically, we generally like to be between 1-5% of Net Liquidating Value per position. But interestingly, this number tends to scale inversely with account size. In other words, the smaller your account, the larger your defined-risk positions, and vice versa. As we look to add a new trade in CRM today, we apply our own position sizing criteria to determine if this stock fits.

more episodes from The tastytrade network