Yes, your position sizing strategy is that important.įor many years Dr. When you have a great trading system, it is certainly easier to meet your system objectives through your position sizing method however, you still have a chance to meet your objectives and profit with an average system if you understand how to position size properly. Tharp coined the term Position Sizing to be specific about this approach. To clarify the vast differences in what traders refer to as "Risk Management", Dr. Others work so hard to get themselves a good system, but fail to realize that position sizing strategies are the key to getting what they really want. What most traders fail to understand is that the key aspect of risk management is “how much” to invest in any position. But risk management can mean so many different ideas.
Investment professionals have called this factor “asset allocation” or “money management.” Risk Management is what most call it. Instead, it has everything to do with the “how much” factor when you invest or trade. Your success as a trader has little to do with selecting the right investment or even having a great system.
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