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Risk & Position Management
Position Sizing
Definition
Determining how much capital to allocate to a single position based on conviction, volatility, and account risk tolerance. Conservative short sellers cap positions at 1-3% of portfolio NAV.
Related Terms
Drawdown
The peak-to-trough decline in an investment's value, expressed as a percentage. Short sellers track adverse drawdowns to size positions and set stop-losses.
Risk-Reward Ratio
The ratio of potential loss to potential gain on a trade. For shorts, the maximum gain is bounded (price can only fall to zero) while the loss is unbounded (price can rise indefinitely) — making R/R discipline especially important.
See short selling in action
Explore real-time ASIC short position data for ASX stocks.