How to manage your position?

What’s position sizing?

Synthetic positions and turnover positions are symmetrical. Synthetic positions refer to position aggregate of foreign exchange settlement business towards clients & selves and foreign exchange market among banks. 

The position here refers to the difference in foreign exchange settlement. To bank it’s the difference between buying and selling foreign exchange in a day. The synthetic position is to add up the foreign exchange settlement of client and bank itself and the difference of foreign exchange trading among banks. 

How to manage position sizing?

If the buying price in trading is $105, the stop price is $100, you can trade 200 shares before touching the $100 stop price. 200*105 = 21,000 USD, and this is your position of 200 shares trading, about 20% of the total trading capital, the potential stop range is 5%, which means it accounts for 1% of your total trading capital.

1. The position that is 20% of the total trading capital plus 5% of the potential stop range makes 1% of the total capital.
2. The position that’s 10% of the total capital plus 10% of the potential stop range makes 1% of the total capital.
3. The position that is 5% of the total capital plus 20% of the potential stop range makes 1% of the total capital.

Average True Range (ATR) enables you to understand the daily price fluctuation range, and it will help you set up positions based on your timeframe and stock fluctuation. If your buying price is $105 and the stop price is $100, then your ATR is $1, you have 5 fluctuating days to stop loss.