Position Sizing

He credits two mentors — an early Pittsburgh boss who taught him craft, and Soros, who taught him the single most important lesson of his career: position sizing. When he joined Soros, he expected to learn about macro. Instead, he learned that being right or wrong matters far less than how much you make when right and how little you lose when wrong. That asymmetry compounds differently than anything else.

"It's not whether you're right or wrong, it's how much you make when you're right and how much you lose when you're wrong."

Despite having more pattern recognition and tools than ever, he admits he was a better portfolio manager in his 30s and 40s because he had the courage to size into conviction. Wisdom and capital accumulate; willingness to act on them can quietly erode. He is actively trying to regain that nerve — not for performance, but because the game is more fun when you play it fully.

Triple-digit returns require approaches that traditional financial advice explicitly discourages: leverage, concentrated positions, high turnover, and rigorous timing. Minervini describes his 2021 championship run as 'probably the second most aggressive' he has ever traded. The returns come from maximizing your proven edge across more and larger repetitions — not from random risk-taking. Critical is avoiding dead time: every day capital sits in a stalled position is a day it isn't compounding.

"You're definitely not going to get those big returns by having a well-diversified portfolio and low turnover."

Progressive exposure means entering with a small initial position and adding as the trade proves itself — not waiting until everything aligns before committing meaningful capital. The common complaint is that by the time you've ramped up, the stock has already pulled back. Minervini's response: that means you're not moving fast enough after confirmation arrives. Professionals fire a test position, recognize the setup earlier, and then increase size quickly as the stock acts right. Position size grows proportionally to how well the trade is working, not to how comfortable you feel.

"By the time they get all the green lights it might be a little late."

When a new, unproven stock enters Minervini's universe, he begins with a deliberately small position. The first entry is not about making money — it's about getting a real-money feel for how the stock behaves. As the stock proves itself by holding above stops, following through on up days, and behaving normally during market pullbacks, he adds. His largest positions are always in his most proven ideas, with weeks or months of confirming behavior behind them, not in his newest ones.

Breitstein's rule: size 25% larger when the intraday and daily trends simultaneously align. When a stock breaks out on the intraday chart and is also moving on the daily, weekly, and monthly, every participant category is on your side — momentum traders, fundamental longs, and shorts who need to cover. He uses the AVGO breakout on Nvidia's AI earnings guide as the example: multiple timeframes firing together is rare, and the multiplier is how you capitalize without changing your risk management structure.

"When you identify these trends properly, you can really start to apply it into your trading with these rules."

Risk management was Breitstein's biggest weakness despite his career success. His core rules: every trade must have a structure that allows a stop — if it doesn't, find one or don't take it. Second, know how much to risk in different setup qualities and never risk so much that a few losses become demotivating. He introduces the A+ setup framework: rate setups by quality and commit capital proportionally. The more variables that align — volume, extension, catalyst strength, short positioning — the higher the grade and the larger the position.

Ryan currently runs 10 equal positions, allowing individual stocks to grow to 15–20% when they perform — less extreme than his championship concentration, but still deliberate. His framework for high-growth stocks: because they carry far more volatility than the general market, being 80% invested in them is the functional equivalent of 140% invested in a standard portfolio. He avoids margin specifically because of this — when high-octane growth stocks turn, they fall so fast you can't exit quickly enough, and leverage amplifies that into catastrophic losses. He now maintains a mix: a few very high-octane names, some moderate growth, some slower — balancing compounding power against the survival risk of a sudden sector rotation.

Reverd's risk framework starts from the portfolio level: they typically risk no more than 50 basis points per trade, and increasingly closer to 15–25bps, determined by how many magic elixir criteria the opportunity checks and their conviction level. Position sizes are capped at 12.5% in Turbo (the aggressive fund targeting accredited investors) and 8% in Protection (skewed to retirement accounts). All three funds — Turbo, Grow, and Protection — include an index overlay in 1x, 2x, and 3x S&P that is dialed up or down based on trend-following signals, ensuring broad market exposure is always sized appropriately alongside individual stock positions.

Host asks what an A+ setup looks like. Gon walks through a real example: stock gaps up pre-market, fades out intraday, then forms a base at a reference level. His buy point is the breakout of the intraday high after that base has formed — he wants to see increasing volume as it reclaims that level. On high-conviction A+ setups, he goes all-in — full account — drawing on Lance Breitstein's advice to go big when the trade is genuinely easy. The stop is placed just below the base; if it loses that level, he's out.

"My buy price is my stop loss — the moment it takes out my entry, that tells me the setup failed."

Schwager addresses the widespread 1% risk rule and acknowledges it is sound advice for most traders most of the time — but identifies a critical exception documented repeatedly across all five books. When conviction is very high and opportunity is clear, the great traders step on the accelerator. He tells the Druckenmiller story: when Druckenmiller showed Soros a billion-dollar position in the Deutsche mark ahead of German reunification, Soros asked 'you call that a position?' Schwager also describes Soros's Plaza Accord trade — when the yen surged 700 points overnight, Soros stopped traders from taking profits: 'The Fed just told me the yen is going up for a year. Why would I sell it on the first day?' Druckenmiller credits Soros with teaching him it is important to be a pig when the opportunity is there.

"Soros asks him 'how big's your position?' He says a billion. Soros says 'you call that a position?' — if you're that sure, why do you only have a billion on?"

Schwager revisits some of the extraordinary track records he has encountered across five books, including Bonnie Schwartz who made roughly 25% per month for nearly a decade — documented and real. He explains why this does not compound to an absurd fortune: traders like Schwartz could not let accounts grow because they would start moving the market against themselves. Many pull capital out consistently and keep trading size flat. At larger AUM, percentage returns necessarily compress because the manager becomes a price factor. The trader making 300% per year on $50,000 simply cannot replicate that at $5 billion — and that is not a failure, it is a structural reality of how markets work.

"He was making 25% a month over nearly ten years. I know a lot of people are thinking — why doesn't he have one-fifth of the GNP? Because he wasn't compounding. He kept pulling the money out."

When the COVID sell-off bottomed in mid-March 2020, Kristjan had very few positions. He didn’t believe the bounce at first — but then saw an enormous wave of setups developing simultaneously. He went from two or three positions to seven, then to fifteen, rapidly scaling up as the bull market confirmed itself. Swing trading means sitting in cash for long stretches, so when a strong multi-month trend emerges you have to press it hard. He also addresses a related principle: the vast majority of his annual gains come from a small percentage of his trades. Most trades roughly break even or produce small gains; a handful of exceptional winners — maybe 15 to 20 percent of all trades — drive the year.

Kristjan explains how he has scaled his trading as the account grew: when his account doubles, his position sizes and risk exposure eventually double too — always in percentage terms, never in fixed dollar amounts. He keeps almost all his capital in the account, allowing compounding to do its work over time, withdrawing only for taxes and living expenses. On margin: he uses it only when things are going well and he has a profit cushion — margin is something you have to earn, not a default privilege. He got burned early using leverage at the wrong time; now he deploys it selectively during strong trends. Thinking in percentages rather than dollar amounts is the single most useful frame shift he recommends for traders at any stage.

Williams identifies position sizing as the most critical element of trading — more important than entry timing, exit rules, or system sophistication. He risks between five and ten percent of equity per trade — higher than most professionals, calibrated to his track record and emotional tolerance. His recommended maximum for most traders is four percent. The key insight is that position size is not a judgment call determined by conviction: it is calculated from the stop distance. If the stop is far from entry, you trade fewer contracts to stay within your risk budget. If the stop is tight, you can size up. He walks through the arithmetic explicitly: a $10,000 stop on a $100,000 account at four percent risk means exactly one contract — no room for argument.

"For most people, four percent should be the maximum."

Williams recounts the 1987 Robbins World Cup campaign in which he turned $10,000 into over $1.1 million — an 11,300% return over twelve months. The number most people don't discuss is the one that made it possible: he risked approximately 30% of equity on every single trade. This is an order of magnitude beyond what he recommends, and beyond anything he would attempt again. His daughter Michelle Williams later won the same competition risking 10% per trade — a result Williams considers equally remarkable because it proves that exceptional returns are achievable at far more conservative risk levels. The 11,300% story is both a proof of concept and a warning: the same position sizing that drives extraordinary gains can drive ruin if the strategy has any weakness.

"I risked about 30 percent of my equity on every single trade."