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Position Sizing and Trading Performance
What is the value of the position you are carrying? When we say value, it has nothing to do with margin, risk, where your stop loss is, etc. When we are talking about the world of cash equities, this is quite clear. The importance
What is the value of the position you are carrying? When we say value, it has nothing to do with margin, risk, where your stop loss is, etc. When we are talking about the world of cash equities, this is quite clear. The importance
arises when we are trading futures and options, which is more the case. Let us see this in context of Cash equities, Futures and Options.
Let us say we are buying 1000 shares of XYZ Ltd. For Rs. 500/- a share. The exposure totals to Rs.500 (The price)
Let us say we are buying 1000 shares of XYZ Ltd. For Rs. 500/- a share. The exposure totals to Rs.500 (The price)
X 1000 (The quantity bought). That totals to Rs.5,00,000/-. This is the position size, or in other words “exposure” to the market. The maximum a share can go to is 0. So this is also the “Risk” i.e. maximum that one can lose in this position. To take delivery of this
