Small Size

"Small size" describes a trade that involves fewer shares (or contracts) than a trader's normal or average position. It's a relative term, not a fixed number — what counts as small depends entirely on the trader's usual habits, their account size, and the stock they're trading.

In practice, a trader might say they're "starting with small size" when they take an initial position of, say, 100 shares in a stock where they'd normally trade 1,000, because they're unsure about the setup and want to limit risk while they watch how price behaves. If the trade works, they may then add more shares later — a separate move often called scaling in.

The nuance that trips beginners up is that small size is always relative to something. A hedge fund trading 50,000 shares as a "small" starter position and a retail trader trading 50 shares as a "small" starter position are doing the exact same thing conceptually, just at completely different scales. There's no universal threshold that makes a trade "small" — it's defined by comparison to what that trader normally does, or to the maximum position size they're willing to take in that name.

Small size is also commonly used as a risk-management and information-gathering tool: putting on a smaller trade lets a trader test a thesis with less capital at stake, then decide whether to add more (scale in), hold as is, or exit if the idea isn't playing out (scale out).