Fractional position sizing is viewing stocks as a fraction of your portfolio, rather than just a dollar amount.

Let’s say you have $1,000 to invest, and you decide you want to invest in Google.

A position size of $500 in Google is 1/2 of your portfolio.

That means you only have 1/2 your portfolio left to invest in other stocks!

Now let’s say instead of $1,000, you have $10,000 in your portfolio.

Now, if you were to invest $500 in Google that would be 1/20th of your portfolio.

Even though it’s the same dollar amount as before, it’s a significantly smaller fraction of the portfolio.

Fractional position sizing allows you to consider investments in the context of your entire portfolio.

This will ensure you have intentional fractions left over for more stocks in the long run!

Try using Bloom’s Portfolio Analysis to check what fractions each of your stocks take up in your portfolio! 🥳

Next, we’ll learn about how to decide what fractions to use for each investment, based on your Risk tolerance.