Position Sizing for Things That Can Go to Zero
The single skill that separates traders who last from traders who blow up. It isn't picking winners.
The skill nobody posts about
Everyone posts their winners. Nobody posts the math that let them survive long enough to catch one. That math is position sizing, and in an asset class where any single bet can go to zero, it's the whole game.
Start from the loss, not the gain
Beginners size from the upside: "if this 10x's I make…" Flip it. Size from the downside: "if this goes to zero, does it matter?" If a total loss on a position would hurt your ability to keep playing, the position is too big — full stop, regardless of how good the call looks.
A simple frame: decide what a "unit" is — a fraction of your degen bankroll small enough that ten of them going to zero in a row is annoying, not fatal. Most plays get one unit. Only rare, high-conviction setups earn more, and even then within a hard cap.
Take profit like you mean it
Things that can go to zero can also give it all back. Pre-decide where you take some off — recovering your initial stake early ("playing with house money") removes the worst outcome and lets the rest run without fear clouding your judgment. You will leave gains on the table sometimes. That's the cost of never being wiped out.
Why this beats being right
Two traders, same hit rate. One sizes so a loss is survivable and takes profit; the other goes big on conviction and rides winners to zero. Over a long enough run, the first compounds and the second eventually meets the bet that ends them. Survival isn't a consolation prize — it's the prerequisite for every gain that comes after.
Sizing is rule #10 of The Survival Rules — but it's really the one that makes the other nine worth following.