What is the Position Size Tool in TradingView and How Do You Use it?

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Position sizing is a critical component of trading risk management. But manually calculating the optimal size for each new trade can be tedious.

Luckily, TradingView has a powerful Position Size tool that does all the risk calculations for you! But what exactly does this tool do and how can you utilize it in your trades?

In this guide, we’ll cover the basics of position sizing, an overview of TradingView’s position size tool, how to use it, common practical scenarios, and tips to incorporate it into your risk management strategy. Let’s dive in!

Why Position Sizing Matters in Trading

Position sizing refers to how many shares, contracts, or units of an asset you trade at one time. Proper sizing is crucial because:

It ensures no single trade risks more than acceptable amount of your capital.
Adds leverage to your winners bysizing up in strong trends.
Lowers commissions by scaling orders across entries/exits.
Prevents taking overly large size relative to account and volatility.

In short, intelligent position sizing allows maximizing potential while minimizing risk.

Introducing the TradingView Position Size Tool

TradingView has a flexible Position Size tool to take the guesswork out of sizing trades. You’ll find it under the Risk & Money Management section.

The tool lets you input key risk parameters and it will calculate the optimal position size for you based on those constraints.

For example, you can input your max risk %, stop loss size, account size, and it will output the units or contracts to trade.

How to Use the TradingView Position Size Tool

Using the position size tool is simple:

Open the tool and input your current account balance/equity.
Enter the symbol and price you are looking to trade.
Define your planned stop loss level or distance.
Specify the max risk % per trade (1%, 2%, etc) you are comfortable with.
The tool will calculate the optimal position size based on those inputs!

The Position Size tool streamlines applying consistent risk management. Let’s walk through some common scenarios.

Using Position Size for Long/Short Stocks

For basic long or short stock trades:

Enter stock symbol and current price
Set a stop loss in dollars
Specify acceptable risk % based on account size
Tool will output optimal share quantity to maximize size while respecting risk

Be sure to round share size to nearest 100 for easy execution.

Sizing Options Trades

For simple options trades:

Input option symbol and cost of buying contract(s)
Define max dollar amount you’re willing to risk
Tool will output how many contracts you can buy to stay within risk tolerance

With options, you must quantify total dollar risk due to undefined downside.

Position Sizing for Futures and Forex

For futures, forex, and CFDs:

Enter market symbol and current price
Set stop loss in points or pips based on volatility
Specify account % to risk
Tool will recommend position size in base units like contracts

Use tight stops and round contract size to minimize overleveraging.

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Tips for Incorporating Position Size in Strategy

Some tips for integrating TradingView’s position size tool:

Test different account sizes to see impact on leverage capabilities
Backtest strategies with Position Size tool for ideal risk parameters
Create alerts when your entered risk % warrants a size adjustment
Be consistent applying stop loss and risk % across all trades
Use tool as basis, but also factor spreads, market conditions, intuition

Intelligent position sizing is a balancing act – the tool makes it easier.

Common Questions About the TradingView Position Size Tool

Some frequently asked questions:

Does it work for shorts and options? Yes! Enter all inputs based on the short or option specifics.

Can I use it for crypto? Absolutely. Just input risk in dollar terms as crypto lacks predefined stop losses.

What if I have multiple positions? Ensure your risk % is based on entire account vs individual positions.

Is using a stop loss necessary? Stop loss or risk amount is required to calculate size – you must quantify potential loss.

Key Takeaways on the Position Size Tool

Let’s recap the key benefits of the TradingView position size tool:

Takes the complexity out of calculating optimal trade size
Ensures consistent and prudent risk management strategy
Works across all instruments like stocks, options, futures
Easily tweak inputs to be agile as account size increases
Helps backtest strategies by simulating reproducible position sizing

I highly recommend incorporating TradingView’s free Position Size tool into your broader risk management approach. Proper position sizing is a game changer! Let me know if you have any other questions.