Position Sizing: The Decision Before the Decision

The pile-builder's sizes are archaeology: whatever was bought whenever, grown or shrunk by luck. The result is backwards risk — often the most speculative idea, bought in the most excitement, carries the biggest weight. Renovation step one is simply seeing your current sizes as percentages. Most people have never looked. Most people are surprised.

The amateur sizes for the win — 'if this doubles...' The professional sizes for the loss: if this position hits its realistic bad outcome, does my portfolio shrug, limp, or die? Decide the damage you'll accept FIRST; let that number set the size. You met this exact discipline in the Options School. It governs every instrument, forever.

The cleanest guardrail is a hard ceiling: no position may exceed a set share of the book — our own system enforces caps at order time by code, not committee, so no thesis however exciting can bet the house. Yours needs the same property: a written number, applied at purchase, no exceptions granted mid-enthusiasm. A cap you can talk yourself past is a decoration.

Equal weights are a fine default. If you size by conviction instead — more evidence, more weight — do it as tiers decided in advance (core, standard, starter), not as a per-trade negotiation with your own excitement. Excitement is precisely the wrong sizing input: your maximum enthusiasm and your maximum edge are rarely the same trade. Tiers keep conviction honest.

A position that triples now occupies triple the risk — yesterday's 5% starter is today's 15% concentration, without you ever deciding that. Letting winners run is legitimate; letting them silently repeal your caps is not. The rebalancing lesson next door handles the mechanics. The principle here: a size you never re-decided is a decision you didn't make.