Most Traders Get Position Sizing Wrong. Here’s the Risk Management Fix.
How to align technical stops, position sizing, and portfolio exposure into a complete risk management framework
You’ve probably spent countless hours learning setups.
You probably already know where you would buy.
You probably already know where you would get out if you were wrong.
But here’s the uncomfortable question most traders never ask:
Once you know those two numbers… do you actually know how big the trade should be?
Most traders think they do.
They pick a percentage they want to risk.
They estimate the shares.
They click buy.
And yet something still feels slightly off.
That subtle tension isn’t random.
It’s your brain recognizing a mismatch between what you think your risk is and what it actually is.
The Kovner Doctrine
Bruce Kovner once said:
“Whenever I enter a position, I have a predetermined stop. That is the only way I can sleep. I know where I’m getting out before I get in. The position size on a trade is determined by the stop, and the stop is determined on a technical basis.”
That’s the sequence.
The market defines invalidation.
The stop sits beyond a real technical barrier.
Position size adjusts to that stop.
Portfolio allocation controls concentration.
Most traders invert that.
They choose size first.
Then force the stop to fit.
That’s sizing backwards.
In the full breakdown below, I walk through real chart examples and a complete video walkthrough showing how this works in practice.