Position sizing — short lessons
How much to put on — the share count, the risk, the whole book.
Olympia publishes educational content for learning purposes only. Past performance is not indicative of future results. Nothing here is investment advice.
Position sizing
Risk & sizing
Because losses don't come back even. Lose ten percent and you need eleven to get back; lose half and you need to double. One R caps the damage before you're in, and at three R one win pays for three losses — so winning one in three puts you ahead.
Risk & sizing
Take the dollars you're willing to lose and divide them by the distance to your stop. That's your share count. Tighten the stop and the count goes up, and the amount at risk never moves. You never pick the size — you pick the loss.
Risk & sizing
Trade by trade: entry minus stop, times the shares, added up. Five trades each sized to lose $250 is $1,250 on the line — and if they all lose on the same day, that's 5% of a $25,000 account at once. One trade stinks; heat is what puts you on the canvas.
Risk & sizing
Correlation is how closely two stocks move together, measured on their daily moves: one is lock step, zero is no steady link, minus one is opposite. Five chip stocks with $250 at risk on each aren't five small bets — on a bad day for chips they're one bet of about $1,250.
Risk & sizing
Concentration is how much of the book one idea gets to own; diversification spreads it so no single idea can take you out. $2,000 in one name out of $25,000 is 8% of the account. Enough of one idea to matter, never enough to end the fight.
Risk & sizing
More on the better record, less on the weaker. Olympia sizes from its own record of that kind of signal — how often it paid, what it made, what it lost and how long it took — then takes a slice of it. Conviction picks the size; the cap picks the ceiling.
Risk & sizing
Any idea can miss. RAIL never traded above its entry — its second morning it opened 19% lower, right through a 14% stop, and never came back. All in, that gap alone is about a fifth of the account; at 8% of the book it's about one and a half percent.
Risk & sizing
Before a dollar goes on a trade, one number is already decided: the most it's allowed to hurt. That's your 1R, one unit of risk. It doesn't come from the stock — it comes from your account, a percent you pick once while you're calm, the same in every fight.
Risk & sizing
Two flags — one paid, one died. The ATR number didn't call either one. What it tells you is how rough the ride gets and how much room the trade needs: small breath, tighter room; big breath, more room. Size to the breath, not to the dream.
Prefer the full lesson? Position sizing — full lessons (5)
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