Position Sizing
How much should you allocate to each trade?
This frequently asked question lacks definitive answers. Why? The answer is quite simple; as investors, we all have a different set of goals. There are just too many variables out there (age, income, retirement goals, spending habits, etc.) to give a universal answer to the question.
Options brokers allow you, the investor, the flexibility to allocate your account by specified dollar amount, specified quantity, percentage of available buying power, etc. It is your responsibility to figure out what works with your risk tolerance and investment goals.
This brings us to the important and rarely covered topic of Position Sizing.
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