Why position size matters more than picks
How much you put in each trade often matters more than which stock you pick.
Beginners obsess over what to buy. Experienced traders spend at least as much energy on how much to buy. The size of each position is a big part of your real risk.
The math is unforgiving
If you put your whole account into one stock and it drops 50%, you need a 100% gain just to break even. Spread across many smaller positions, one bad pick barely dents you.
A common rule of thumb: keep any single position small enough that its worst-case loss is a fraction of your account, not a crater in it.
This is why STS caps how much any one sector can dominate the model portfolio — concentration is the fast way to turn one mistake into a big one.
How much you risk per trade shapes your results as much as which trades you take.
Not financial advice · for research and educational purposes only. Nothing here is a recommendation to buy or sell any security. All investing carries risk of loss.