This article was originally released as a followup to “My Super Secret Trading Technique” (which is now “Understanding Leverage“).
In part one of this article, we discussed the importance of money management as part of a good trading plan. We also had a brief discussion of how to adjust your risk exposure in the futures markets. Now, in part two, we will take that knowledge to the next level and discuss position size as it relates to your trading plan
Position size, while it may sound simple, is actually a complex topic. It is no secret that a great deal of the success of the Turtles is attributed to their mastery of money management, and more importantly, their ability to adjust position size appropriately. Even if you are a small account, able to only trade a one lot, you need to consider position size in your money management approach. Otherwise, how will you know when to increase size based on success, or hold off trading until additional capital can be raised.
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