What is account size and trading size?

<p id="isPasted">Account size is the total amount of money, or capital, a trader has in their trading account, while trading size (or position size) is the specific amount of capital or number of units of a security allocated to a single trade. Proper trading size is calculated based on account size, risk tolerance, and the security's entry and exit points, and is crucial for managing risk by preventing a single loss from derailing a portfolio.&nbsp;</p><p>Account Size</p><p>Definition: The total funds or balance available in a trading account.&nbsp;</p><p>Significance: Your account size directly influences how much you can risk on each trade. A larger account can support larger position sizes without exceeding risk limits.&nbsp;</p><p>Examples: Account size is often categorized by capital, such as micro accounts (below \$1,000 USD), small accounts (\$1,000 - \$10,000 USD), and standard accounts (above \$10,000 USD).&nbsp;</p><p>Trading Size (Position Size)</p><p>Definition: The number of shares or units of an asset (e.g., stocks, forex, crypto) to be bought or sold in a single trade. It's determined by calculating how much of your account you are willing to risk.&nbsp;</p><p>Calculation: It's calculated using your account size, the percentage of that account you're willing to risk per trade, and the distance to your stop-loss order.&nbsp;</p><p>Formula: Position Size = (Total Account Risk) / (Risk Per Share/Unit).&nbsp;</p>