Position sizing as a psychology tool, not just a risk number
Size is not only a risk setting. It is the dial that decides whether you can run your own rules, and most rule breaks are a sizing problem wearing a discipline costume.
Is this you?
- —You manage half size calmly and full size badly.
- —You size up after green days rather than clean ones.
- —Open positions distract you from the next setup.
- —You check the P&L more often than the chart.
Two or more of those and this is the state costing you the most, not the strategy.
What it actually costs
Trading above your capacity means your worst decisions happen at your largest size — the exact correlation that turns a small edge into a losing month.
The protocol: The Sleep Test
Trigger — Any size increase, or any session where you moved a stop.
- 1.Before entry, ask out loud: "If this hit my stop right now, would I be calm in five minutes?"
- 2.If the answer is no, cut size by half and ask again. Repeat until the answer is yes.
- 3.Trade that size for five sessions and log how many times you touched a stop or exited early.
How long — Ten seconds per entry; five-session review cycles.
Read the full protocol, success test and what to do if it fails →Do this in your next session
Find the size at which you can follow your rules for three sessions running. Trade that. Raise it one rung only after two sessions scored clean on entries, exits and size.
Not sure this is your state?
The quiz takes two minutes, needs no sign-up, and names your top three protocols out of the fourteen.
Keep reading
Work it through with the Coach
Describe your last bad trade. It names the state, picks the protocol and gives you the exercise to run before the next session. Free to use.