Chapter 8 · Risk, portfolio and taxes
Position sizing
The single decision that determines whether you survive being wrong.
45 of 50 · 7 min
You will be wrong regularly. Everyone is. What separates people who continue from people who stop is not accuracy — it is how much they lost on the occasions they were wrong.
The arithmetic nobody wants to look at
| If you lose | You need this gain to get back to even |
|---|---|
| 10% | 11% |
| 25% | 33% |
| 50% | 100% |
| 75% | 300% |
Losses and gains are not symmetric. This is why capping the size of any single loss matters more than picking well.
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