Intraday Position Sizing Models: How
Praveen Dubey (SEBI Registered RA)
SP RESEARCHVIA PVT. LTD. (INH000015808)
Why Position Sizing Matters More than Win Rate
Even with a 70% win-rate strategy, poor position sizing can wipe out a trading account in a single bad week. SP RESEARCHVIA PVT. LTD. advocates strict, math-based sizing rules.
What is the 1% Risk Rule in Trading?
The 1% risk rule states that a trader should never risk more than 1% of their total trading capital on any single trade, calculated as: Position Size = (Capital x 1%) / Stop Loss Distance.
Intraday Sizing Models
- Fixed Dollar Risk: Lose a flat amount (e.g., ₹2,000) per trade.
- Average True Range (ATR) Sizing: Scale position size based on current stock volatility.
- Percent Volatility Model: Adjust exposure according to account size and asset beta.
Written by Praveen Dubey
Chief Research Analyst | SEBI Reg: INH000015808
Statutory Warning & Risk Disclaimer: Investment in securities market is subject to market risks. Read all related documents carefully before investing. Registration granted by SEBI and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors. Content provided on this blog is for informational and educational purposes only.