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Buy small (position sizing)

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letsinvest2020 asked 5 years ago

What do you mean by "buy small"? How small? If one has $500K what is small from him/her?

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Avatar photoOwen Staff answered 5 years ago

Hello Nit,
Video from Patrick:
https://youtu.be/6CDs7XctvAM

James Goold replied 5 years ago

Hi Pat, I’ve been calculating my position size by looking at what I risk based on the appropriate stop loss for that share. For example if I’m willing to risk 0.5% of my capital (say $100,000) on a share where I need a 7% SL I’ll pyramid in to a total position of $7,000 but if there’s a sensible SL spot at 3% then I could build a $15,000 position. Does this make sense?

Thanks

Jim