Determining Position Sizes

There are a couple of ways to determine how many shares to buy of a certain stock.

1) Always pick a set or arbitrary number of shares.
2) Let your stop determine how many shares you buy.

The second option allows you to control how much money you are risking in any one trade more closely.

If you set a stop first, then you will know when to get out. Based on that stop, you can determine how many shares you want to buy.

If your stop is $.0250, in a $10k portfolio, we are looking at a 400 share position. This means you are risking $100. $100/ $10k is 1% risk.

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