Importance of Position Sizing Position sizing is one of the most important components of successful trading more important than strategy itself. Explaining with an example: Nifty Index Trending system with a Win-ratio of 50%, average profit is 120 points, and this system generates a loss of 80 points over the long term.When it does lose, it loses less than what it makes when it wins. System result for random 6 trades: Trade NoProfit/Loss (Points) Trade1110 Profit Trade2-70 Loss Trade3-80 Loss Trade4130 Profit Trade5-90 Loss Trade6120 Profit Total120 Profit (Points) These System given to 3 different traders to trade with, the results are shown below; Trader 1 Trade NoPointsNifty Trade SizeProfit/Loss 111075Rs.8250 2-7075Rs.-5250 3-8075Rs.-6000 413075Rs.9750 5-9075Rs.-6750 612075Rs.9000 TotalRs.9000 Trader 2 Trade NoPointsNifty Trade SizeProfit/Loss 1110150Rs.16500 2-70150Rs.-10500 3-80150Rs.-12000 4130150Rs.19500 5-90150Rs.-13500 6120150Rs.18000 TotalRs.18000 Trader 3 Trade NoPointsNifty Trade SizeProfit/Loss 111075Rs.8250 2- 70225Rs.-15750 3-80150Rs.-12000 413075Rs.9750 5-90225Rs.-20250 612075Rs.9000 TotalRs.-21000 As the system is the same for all traders, when they bring us back the trading results of the entry and exit points for each trade is going to be the same, leaving them only the position size as the factor that they can tweak.The end results shows how a successful trading system makes different profitability because of Position sizing. Reference:Van Tharp position sizing ArunRam Professional Derivative Trader With Over A Decade of Experience. Previously worked in an Engineering and Mathematical background.