Determining how much capital to allocate per trade based on risk tolerance.
This scope is designed to help you build a practical understanding of Position Sizing. Lessons move from core definitions to real-world context and common failure points.
Reading in order is recommended, but each lesson stands on its own.
An in-depth explanation of how position sizing should relate to conviction, why the distinction is central to risk control, and how to apply the concept to protect trading capital and long-term survivability without relying on forecasts or tips. Includes practical examples and common pitfalls.
A rigorous explanation of overleveraging in position sizing, why it undermines risk control, and how it appears in real trading contexts. Covers mechanics, drawdowns, probability of ruin, practical diagnostics, and common misconceptions without recommendations.
A rigorous overview of how and why to adjust position size after wins and losses, with emphasis on capital protection, drawdown control, and long-term survivability in trading programs and investment processes. Practical examples, common pitfalls, and evaluation methods are included.
A rigorous look at how position sizing errors amplify risk, weaken risk control, and threaten long-term survivability. Covers practical pitfalls, real-world scenarios, and the logic linking size, volatility, leverage, correlation, and capital preservation.
A rigorous examination of what position sizing models can and cannot do, why their limits matter for capital protection, and how those limits appear in real markets with volatility, gaps, correlation shifts, and liquidity constraints. The discussion focuses on structural assumptions, estimation error, implementation frictions, and common misconcept…
