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Position Sizing

Process of determining trade quantity based on risk limits, volatility, liquidity, and return objectives.

Position sizing determines the amount of capital allocated to a trade relative to portfolio risk and strategy.

In oil trading, proper position sizing ensures risk management, controls losses, and optimizes returns. It considers volatility, liquidity, and leverage.

Techniques include fixed dollar, percentage of capital, or risk-based sizing. Oversized positions amplify gains and losses; undersized positions reduce effectiveness.

Position sizing is a foundational element of disciplined trading and portfolio management.

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