Position Sizing Strategies

Why Consistency Matters

Because no individual trade's outcome can be known in advance, varying position size based on confidence in a particular setup effectively means taking on more risk exactly when overconfidence may be highest. A consistent, predetermined sizing method removes this subjective element and keeps any single loss from being disproportionately damaging to the account.

Position sizing is directly tied to how much of a losing streak an account can survive — a series of losses at a small, consistent risk percentage per trade affects an account very differently than the same series at a larger, inconsistent size. Since strategies inevitably experience streaks of losses even when working as intended, sizing conservatively enough to withstand a realistic losing streak is a central part of any strategy's long-term viability.