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Risk management

Position sizing: never bet the account on one idea

Before "what should I buy," the more important question is "how much." This is position sizing, and it matters more than almost any other decision you'll make.

Why size before conviction

Even a signal you feel great about can be wrong. Sizing is how you make sure being wrong once doesn't wipe out weeks of being right. If one position is large enough to seriously damage the account when it fails, no amount of confidence going in changes that math.

Think in percentages, not dollars

"$1,000" means something different in a $5,000 account than a $100,000 one. Think in terms of a percentage of your total portfolio per position. There's no single universal right number — but "all of it" is never the right number, no matter how strong a signal looks.

A starting habit

Many disciplined traders cap any single new position well under 10% of the account, and go smaller on ideas they're less sure about. Decide your number before you're staring at a chart that's moving — that's when sizing decisions get hijacked by emotion.

Practice this

Next time you take a signal in your paper account, decide the dollar size — as a percentage of your total portfolio — before you look at the price.

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