Position sizing can help you effectively risk manage your positions and avoid massive drawdowns in your portfolio. This chart from today's Early Look from Hedgeye CEO Keith McCullough shows his strategy:
How about YOUR Rules?
A) Have you already established MIN and MAX position rules, by Asset Class?
B) Have you already established how many basis points you’ll buy/sell incrementally?
C) If/when you violate your established rules, why are you doing that?
If you want/need to take 8-10% positions in EQUITY positions and/or 5-10% Asset Allocations in something with a lot of volatility like Uranium, knock yourself out trying!
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