The position sizing formula can be stated as:
where V = Volume
R = Amount to risk
S = Stop loss amount
Gain needed to recover
A Trader's Money Management System
Bennett A. McDowell
Risk control tends to be the last thing that most traders focus on, perhaps because of the popular belief that it's their trading strategy that will generate great fortunes. But ultimately, a strategy alone won't create riches. A trader or investor needs to develop discipline, a strong financial psychology, and a sound money management system to maximize profits and keep them out of financial danger. In A Trader's Money Management System, veteran trader Bennett McDowell offers readers an expert guide to the most important elements of money management in trading.