One System, One Decision, Opposite Results
Most traders believe performance comes from having a better trading system.
A controlled experiment at Uppsala University (Sweden) showed why this belief is wrong.
A group of 62 participants traded the exact same automated system:
Same assets
Same entries and exits
Same timing
Same signals
No interpretation was allowed.
Each participant started with the same capital and executed roughly 50 trades.
They were allowed to make only one decision: Position size.
The results were extreme.
One participant lost almost all the capital.
Another turned the same initial amount into a very large gain.
Same system.
Same market.
Same signals.
The difference was risk per trade.
Participants who failed risked, on average, around 22–24% of their capital per position.
Participants who succeeded risked between 3% and 7% per trade.
Nothing else changed.
Those risking large position sizes experienced drawdowns they could not recover from. Those keeping position sizes small survived volatility, stayed in the game, and allowed compounding to work.
This is why position sizing is not a secondary rule.
A trading system without proper risk control is not incomplete.
It is structurally fragile.
Have a good Sunday !
ImGeld Team