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If you have been trading for a while, you have probably noticed a familiar pattern. The stock selection isn’t always wrong. Still, your account balance takes a hit. After three good trades, one bad trade wipes out all the profit.As a trader, you know how hard-earned profits are. Losses feel like a shock. In most cases, the problem doesn’t lie in which stock you traded, but how much you traded.That’s why experienced traders use specialised tools or calculators to get an accurate idea of their portion size. In this blog, we have discussed how you can use one of these calculators to stay long enough in the game.Why Most Traders Lose Money Even with Good Stock PicksLike most traders, you may be prioritising only the “right” stock to pick. However, even the perfect setup sometimes fails. The real financial damage happens when a single loss erodes a significant chunk of your capital.Here are the most common reasons behind this loss· Trading with oversized portions due to high confidence· Putting a significant part of your capital at risk on a single trade· Once you make a profit, you start ignoring stop-lossThe harsh truth is that you don’t need to be wrong many times to lose a significant amount. Unless you control your portion size, a good strategy can fail. This is exactly what a position size calculator helps to address.What Is a Position Size Calculator?Using a position size calculator, traders can decide the number of shares or the value of shares they should trade based on risk, thereby eliminating emotion. Instead of asking how much money you should put into the stock, the calculator evaluates the amount you can afford to lose if the strategy goes wrong.A portion size calculator works on the following details:Your total trading capitalThe percentage of capital you’re willing to risk on one tradeYour stop-loss levelAfter you provide these inputs, it tells you the exact portion size that helps you control your risk.How Position Sizing Actually Protects Your Trading AccountHere’s how a position size calculator helps you protect your capital.Controls Maximum Loss Per TradeExperienced traders risk a little portion of their capital per trade, typically not exceeding 2%. A portion size calculator helps you incorporate this principle. So, even if the trade hits a stop-loss, you incur limited damage from which you can recover.Prevents Emotional OvertradingEmotions often take over when conviction runs high. Often, traders tend to increase their portion size, thinking that one last strategy will work. However, a calculator eliminates that emotional effect. It predefines your risk before you enter the trade, thereby forcing you to stay disciplined. The calculator treats every trade equally, regardless of your confidence level.Helps You Survive Losing StreaksAs a trader, you know that losing streaks are inevitable. However, what’s more important is the amount it costs you. For instance, if you lose 2% of your capital per trade, you can endure multiple losses. Still, you can mentally stay healthy and retain your financial stability.Unless you maintain proper sizing, a few losses in a row can deplete your capital.Position Size Calculator vs Instinct-Based TradingThere’s no denying that trading based on your instinct feels exciting. However, it’s disciplined trading based on rules that can deliver returns.When you use your instinct to decide the portion size, the results become inconsistent. Some losses cause more damage than others. A portion size calculator keeps your risk consistent. The same logic is applied to every trade.A stock average calculator is another helpful tool that plays a complementary role. Portion sizing is used to manage risk before you enter a trade. It helps you manage an existing position.However, you need a planned strategy when you average costs. Unless you have proper sizing, averaging increases the risk instead of reducing it. Traders must use both these calculators together to minimise risk and maximise returns.ConclusionBefore you make trading successfully a habit, here are two things to understand. Firstly, trading is not about making money quickly. Secondly, it’s more about not losing your money recklessly.Not all traders use portion size calculators, but those who do manage to control their risks. Along with a stock average calculator, it can help you participate in trades with clarity and keep emotions away. In the long run, traders who give themselves the chance to grow are the ones who survive. These useful calculators can help you manage that risk to thrive long enough to make money.

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Business :How a Position Size Calculator Keeps Your Trading Account Alive?

If you have been trading for a while, you have probably noticed a familiar pattern. The stock selection isn’t ... ...