Position sizing and money management are paramount for long-term trading success, as they dictate how much capital is allocated to each trade and how overall risk is controlled. Position sizing refers to determining the number of units (shares, contracts, lots) of an asset to buy or sell for a given trade. It's not about how much money you can make, but how much you can afford to lose on any single trade. A common approach is the fixed-percentage risk model, where a trader risks a small, fixed percentage (e.g., 1% or 2%) of their total trading capital on any single trade. This means if their capital changes, so does their position size. Money management encompasses broader strategies for protecting and growing capital. This includes setting overall portfolio risk limits, diversifying investments, and continuously monitoring account equity. It also involves understanding concepts like drawdown and recovery. By combining sound position sizing with comprehensive money management, traders can prevent single large losses from wiping out their capital, ensure survival through losing streaks, and allow their profitable strategies to compound returns effectively over time.