Size Discipline

When traders vary position size based on conviction, the math almost always works against them. The trades they feel strongest about are the ones where confirmation bias is highest; the trades they feel weakest about are often the ones where their actual edge is highest because skepticism produces better evaluation. Sizing up on the former and down on the latter typically produces worse expectancy than sizing consistently across all setups.

Veteran traders quoted across this series (Peter Brandt, Paul Tudor Jones, Stanley Druckenmiller in his risk discussions) converge on roughly 1 percent of account risked per trade as the canonical baseline. The exact number matters less than the consistency. A trader who risks 0.5 percent on quiet trades and 3 percent on hot ones is running an unmeasured strategy.

The opposite of size discipline shows up after wins (over-sizing the next trade in euphoria) and after losses (under-sizing then over-sizing to 'make it back'). Both errors are visible in the variance of per-trade risk across the trader's history. Tightening that variance is the highest-leverage risk improvement a discretionary trader can make.