Definition
How many shares or contracts a trade uses, and so how much money is on the line.
The story
Two traders take the same trade with the same stop-loss. One trades one contract and the other trades five; the second gains or loses five times as much. A common approach in trading education is to work backward: decide the most you're willing to lose on a trade, then choose a size where hitting the stop-loss costs no more than that.
Why markets watch it
Size, more than the setup itself, decides how much a single trade can hurt.
Connects to
Stop-lossRisk-reward ratioLeverageDrawdownRisk managementTrading plan
We explain why it moves markets. What you do with it is your call. Commentary and education only. Not financial advice. All terms