Position sizing
Sizing is deciding how much money a bet gets, the discipline that lets a fund be wrong many times and still be standing. The same good idea can be a smart bet at one size and a fatal one at another.
Position sizing decides how much rides on each bet, and its first job is to survive being wrong. The stronger the edge and the deeper the market, the bigger the size, all inside the limits you set.
Ask what broke most failed traders and the answer is rarely bad ideas. It is good ideas, oversized. Sizing is the unglamorous craft that decides how much each bet gets, and it is where funds are actually won and lost.
01The first rule: survive being wrong
Every bet, however strong, can lose, an 80% estimate misses one time in five by construction. Sizing starts from that fact: no single loss, and no plausible streak of losses, may knock the fund out of the game. The bankroll is the machine that harvests expected value over hundreds of bets; protecting the machine outranks maximizing any one bet.
02Same idea, three sizes
| A 74%-conviction bet at 62¢, from a $1,000 fund | Bet 2% ($20) | Bet 10% ($100) | Bet 40% ($400) |
|---|---|---|---|
| A normal 3-loss streak costs | ≈$60 | ≈$300 | the fund |
| Can keep playing after? | Easily | Bruised | No |
| Verdict | Sustainable | Aggressive | Gambling with extra steps |
Same edge, same conviction, only the size changed, and it changed everything. The mathematics of repeated betting is brutally clear: oversize a winning strategy enough and you still go broke, because one bad run arrives before the averages can save you.
03What sets the number
Size scales with the quality of the case, more edge and more conviction earn more capital, and scales down with everything that could bite: thin liquidity, correlated bets already open, leverage anywhere nearby. The spirit of the classic Kelly formula survives in one sentence: bet in proportion to your advantage, and less than the math allows, because your estimate of the advantage is itself uncertain.
04Sizing inside your fund
In an Opusfund, sizing is not left to in-the-moment judgment, yours or the AI’s. Your caps set the hard ceilings (per bet, per theme, per period), the conviction grade sets the scale within them, and every bet clears those gates before it moves. The memo then shows you the size next to the reason, so the discipline stays auditable.
The market can stay wrong longer than an oversized position can stay solvent. Size so that being early, or just unlucky, is an expense, never an ending.
How your CEO runs the numbers
Your CEO runs a $10,000 fund with a rule you set: risk at most 2% $200 on any one bet. On a market where being wrong means losing the whole stake, that caps the position at $200. On a bet where it would cut the position at a 50% loss, the same $200 of risk allows a $400 stake. Same rule, two different sizes what stays fixed is the risk, not the amount staked.
What to remember
- Sizing’s first rule is to survive being wrong, not to maximise one win.
- The same idea can be a small or large bet depending on the edge.
- Size scales with conviction and liquidity, capped by your rules.
- Your CEO sizes every position inside the caps you’ve set.