Risk is more than volatility
Price volatility is visible, but permanent capital impairment usually comes from excessive leverage, weak economics, governance failures or paying for expectations that never arrive.
Size from downside first
Estimate a plausible adverse outcome and the probability that your thesis is structurally wrong. Position size should allow that outcome without forcing an emotional or liquidity-driven decision.
- Start smaller when the range of outcomes is wide.
- Increase only when evidence improves, not merely because the price falls.
- Treat correlated positions as one larger exposure.