HOW POSITION SIZING CAN BE A GAME

CHANGER

HALIFAX AMERICA

2017

THE RISK OF LOSS IN THE TRADING OF STOCKS, OPTIONS, FUTURES, FOREX, FOREIGN EQUITIES, AND BONDS CAN BE SUBSTANTIAL AND IS NOT SUITABLE FOR ALL INVESTORS. FOR A COPY OF “CHARACTERISTICS AND RISKS OF STANDARDIZED OPTIONS” VISIT HTTP://WWW.THEOCC.COM/ABOUT/PUBLICATIONS/CHARACTER- RISKS.JSP TRADING ON MARGIN OR THE USE OF LEVERAGE IS NOT SUITABLE FOR ALL INVESTORS AND LOSSES EXCEEDING YOUR INITIAL DEPOSIT IS POSSIBLE. SUPPORTING DOCUMENTATION IS AVAILABLE UPON REQUEST.

RISK DISCLOSURE

TRADING FUTURES, OPTIONS ON FUTURES, AND FOREX

INVOLVES SUBSTANTIAL RISK OF LOSS AND IS NOT SUITABLE

FOR ALL INVESTORS. CAREFULLY CONSIDER WHETHER

TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR

CIRCUMSTANCES, KNOWLEDGE, AND FINANCIAL RESOURCES.

YOU MAY LOSE ALL OR MORE OF YOUR INITIAL INVESTMENT

AND ONLY RISK CAPITAL SHOULD BE USED. OPINIONS, MARKET

DATA, AND RECOMMENDATIONS ARE SUBJECT TO CHANGE AT

ANY TIME. THE LOWER THE MARGIN USED THE HIGHER THE

LEVERAGE AND THEREFORE INCREASES YOUR RISK. PAST

PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE

RESULTS.

Position size: the number of shares or lots

you buy or sell to enter a trade.

WHAT IS POSITION SIZING?

Position "sizing": the act of selecting a

predetermined position size to manage risk

and limit losses.

BUT THERE'S MORE TO IT

WANT AN EXAMPLE? 

Position sizing can also be a means to optimize trading

profits in addition to managing risk.

TAKE A LOOK AT THE "BREAKEVEN" TRADE BELOW

THE

TRADE

IMAGINE THIS SCENARIO

You have a margin trading account of $25,000 

XYZ stock is trading for $15.00

What would happen if you were to trade a fixed number of shares versus position sizing each trade?

Would it make a difference, given that the 3 trades yielded no profit?

FIXED SIZE OF 500 SHARES

What might the result have been had you

position sized, say, by 2% risk?

POSITION SIZE BASED ON 2% RISK

See the difference?

THE DIFFERENCE BETWEEN -0.16% AND 5.3% HAD

NOTHING TO DO WITH THE TRADES. 

IT HAD EVERYTHING TO DO

WITH POSITION SIZING.

THANK YOU!

HALIFAXAMERICA.COM

Have Questions? Contact Us at team@halifaxamerica.com

& TRADE WISELY