3. Day Trading Rules For Beginners

Learn Proper Position Sizing

The biggest risk of ruin for traders is sizing their trades too big. In fact, a Journal of Finance study of 82 pension fund managers found that 91% of portfolio performance could be attributed to position sizing and asset allocation, not their market timing or individual security selection.

Ideal position size will vary by strategy and portfolio size, but a good rule of thumb is you shouldn’t risk much more or less than 1% of your portfolio on each trade.

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