LESSON 14 OF 16 · 3 MIN
Position size and stop-losses
IN SHORTDecide how much you could lose before you buy. Position size and a planned exit keep a single mistake small.
Position size is how much you put into one investment. Many experienced investors limit how much of their total they risk on any one idea.
A stop-loss is a planned exit: a price at which you sell if the idea is wrong. Some brokers can place it as an order for you. In fast falls, or overnight gaps on bad news, you can be sold below your stop.
KEY POINTPlan the exit before you enter. The invalidation level from chart analysis is a natural place to think about it.
- Only invest money you can afford to lose.
- Small companies need smaller positions: they move more and spreads are wider.
- Never borrow to invest unless you fully understand the risks.
Try it: Read how our chart analysis names invalidation levels.
Read about levelsEducation only. TradingFloor AI does not give investment advice. Prices can fall as well as rise and you may get back less than you invest.