I’m taking a trading class at a local university, and I’m confused about a very basic point.
In class, we learned that position sizing is a major part of success in this business. The instructor suggested risking 1% of your equity on each trade as a beginning position sizing method.
Does this mean to set your stop so that any potential loss is that 1% figure, or does this mean to only spend 1% on any purchase?
For example, if I have $100,000 in my trading account, does this rule mean…