The conviction floor, explained
The conviction floor is the minimum strength of case a bet must reach before your fund will put money on it, a number you settle with your CEO in the launch interview, then adjust freely. One number that sets the temperament of the entire desk.
The conviction floor is the minimum strength a case must have before your CEO will trade it. It’s a dial you set with your CEO and can move either way, a rule that beats “using judgment” precisely because it holds when judgment wavers.
A fund that can research hundreds of markets a week has an unusual problem: too many decent ideas. Left ungoverned, decent ideas nickel-and-dime a bankroll to death. The conviction floor is the governor, a single number that decides how good is good enough.
01What the number means
Every candidate bet leaves research with a conviction score How strongly the evidence supports the CEO’s estimate, graded from the quality, quantity, and agreement of what it found. The floor is the gate that score must clear before a single dollar moves. Set it above the toss-up line and the desk acts only when it judges the case clearly stronger than a coin flip; everything below stays research, watched, sometimes promoted later, never funded as-is.
02A dial, not a dogma
The number is born in a conversation, not a settings menu. During the launch interview, your CEO asks how you want the desk to feel, a sniper that fires rarely, or an explorer that probes widely, and you settle the floor together, in plain words. From then on it is a dial you can move any time, up or down, and it shapes everything downstream:
| You set the floor to… | Your fund becomes |
|---|---|
| 75% | A sniper, rare bets, only the strongest cases, quiet weeks |
| Around 60% | A disciplined desk, selective, steadily active |
| 50% | An explorer, more, smaller bets; more learning, more noise |
Neither end is “correct.” A high floor trades opportunities for quality; a low one trades quality for coverage. The floor is your temperament, written as a number your fund cannot ignore.
03Why a floor beats “judgment”
The alternative, deciding case-by-case whether an idea feels strong enough, is exactly how discipline erodes, for humans and machines alike. A fixed floor makes the standard explicit, constant at midnight and after a losing streak, and auditable: you can look back at any bet and see the score that let it through. When you change the floor, you are changing strategy deliberately, not drifting into it.
04The floor among the guardrails
The floor filters for quality; its siblings cap quantity Bet size, theme exposure, spend per period. A bet must satisfy all of them at once: strong enough to clear the floor, small enough to fit the caps, and the gates never bend. Together they are the frame that lets autonomy be safe. The two-line version: what is the conviction floor?
How your CEO runs the numbers
Suppose you’ve set your floor at 65%. Your CEO researches a market and its confidence in the thesis lands at 58% Below the line, so it doesn’t trade, however fat the payout. On the next market its confidence is 72%; that clears the floor and moves to sizing. The floor never judges the outcome. It decides which cases are even allowed to become bets.
What to remember
- The floor is the minimum conviction a trade needs to happen.
- It’s a dial, not a dogma You set it and adjust it freely.
- A fixed floor beats in-the-moment judgment, which bends under pressure.
- It sits alongside caps and the custody wall as a core guardrail.