position sizing
[pəˈzɪʃən ˈsaɪzɪŋ]
noun
dimensionamento de posição
1. The practice of determining the number of units or amount of capital to allocate to a particular investment or trade, typically based on risk management principles and portfolio strategy
Proper position sizing is crucial to protect your portfolio from catastrophic losses.
O dimensionamento adequado de posição é crucial para proteger sua carteira de perdas catastróficas.
2. A risk management technique that ensures no single trade represents an excessive portion of total capital at risk
The trader used position sizing to limit losses to 2% of their account per trade.
O trader usou dimensionamento de posição para limitar perdas a 2% da conta por operação.
3. The calculation of trade size based on entry price, stop-loss level, and maximum acceptable loss
Position sizing algorithms automatically adjust trade size based on volatility.
Algoritmos de dimensionamento de posição ajustam automaticamente o tamanho da operação com base na volatilidade.
Position sizing is a fundamental concept in both American and Brazilian financial markets. In the USA, it's central to day trading and swing trading culture, particularly among retail traders. In Brazil, despite growing retail investor participation, position sizing principles are increasingly emphasized by brokers and financial educators following international best practices. The term reflects a professional approach to trading and investing, distinguishing disciplined traders from gamblers in financial markets.
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