Position sizing is deciding how much money to put into a single trade. Instead of betting everything on one idea, you choose an amount that keeps any one loss survivable. Good sizing, often a small percentage of your account per trade, is what keeps a few bad calls from wiping you out.
With a $100,000 account you decide to risk 1% ($1,000) per trade. You buy a $50 stock and set a stop-loss at $45, risking $5 per share. Dividing $1,000 by $5 means you buy 200 shares ($10,000). Even if the trade hits your stop, the worst case is a planned $1,000 loss, not a portfolio-ending one.
Position sizing decides how much a single trade can hurt you, and that quietly matters more than which stock you pick. Two people can buy the same name, and the one who sized it small shrugs off a loser while the one who went all-in takes real damage. It's what keeps a normal losing streak from ending an account. A paper-trading simulator lets you test sizing rules across many trades and watch how the account curve behaves. JagSim gives no buy or sell recommendations, price targets, or investment advice.
Sizing by conviction, not by risk. Beginners often pour more money into the trades they feel surest about. Confidence and outcome are not the same thing, and the most certain-feeling trades still lose sometimes.
Ignoring the stop when sizing. Position size and stop distance work together. Buying a fixed dollar amount without checking how far away the exit sits means the actual money at risk swings wildly from trade to trade.
Treating every stock the same size. A calm, slow-moving stock and a jumpy, volatile one behave very differently. Using an identical share count for both quietly loads far more risk into the volatile name.
A common approach ties size to a small, fixed percentage of the account risked per trade, then works backward from the distance to the stop to get a share count. The percentage is a personal preference, not a rule.
Not quite. Position sizing is about how big one trade is, while diversification is about spreading money across different holdings. They overlap but answer different questions.
Yes. On a paper-trading simulator like JagSim you set sizes with virtual cash and see how different amounts affect your account over many trades, with no real money involved.
Last updated: July 2026
Educational only. Not investment advice. JagSim is a simulator, not a broker.