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Position sizing for stock traders
How much of my portfolio should one stock be?
Short answer: Size the position so that being wrong is survivable and boring. A practical framework: risk a fixed small percentage of the account on any single idea, and cap any one holding at a percentage of the portfolio you could watch fall by half without changing your plans.
The arithmetic that matters
A 50% loss requires a 100% gain to recover. A 20% loss requires 25%. Position sizing is what keeps your losses in the range where recovery is a matter of patience rather than a matter of luck.
Leverage changes the calculation entirely
With 5x leverage, a 20% adverse move is a total loss of your capital. Normal market volatility becomes fatal. This is the specific mechanism through which most leveraged retail accounts are lost.
Speculative names need different rules
For pre-revenue and sub-$5 names, assume the position can go to zero and size on that basis. If total loss of the position would change your financial plans, the position is too large.
Where to do it
Frequently asked questions
Is there a standard maximum position size?
There is no rule, but many professional mandates cap a single holding in the mid single digits as a percentage of the portfolio. Retail portfolios routinely run far more concentrated than that.
How does this apply to CFDs?
Size on the full notional exposure, not on the margin you posted. The margin is a deposit, not the size of your bet.
Reviewed August 2026. Information only — not investment, tax or legal advice.