Two traders run the SAME strategy with the same win rate. One risks 2% of their account per position, the other 25%. The first compounds; the second is mathematically guaranteed to blow up on an ordinary losing streak. Sizing isn't a detail of trading — it IS trading. Edge decides how fast you grow; sizing decides whether you're alive to grow at all.
Why streaks kill
- A 50% win-rate strategy will hit 5 losses in a row roughly once every 32 sequences — i.e., constantly.
- At 25% risk, five straight losses is −76% of the account. You now need +320% just to get back to even.
- At 2% risk the same streak is −9.6%. Annoying. Recoverable. Irrelevant by next week.
House rule: 1–5% of your balance per position, toward 1% while you're learning a setup and never above 5% no matter how certain it feels. Certainty is a feeling, not information.
In evaluation-style trading this is doubly binding, because a max-drawdown rule turns oversized losses into instant failure. Professionals size so that being WRONG is boring — that's the whole trick.