Risk and position sizing
A calm framework for how much of equity to put into one idea.
6 min · Original LiquidityFlow guide
Position size is the amount of capital exposed to an idea. A common practice framework is to decide first how much of total equity you are willing to lose if the thesis fails, then back into quantity from your invalidation level.
Concentrating more than about 20% of equity into a single coin means that coin’s volatility dominates your outcome. That can be intentional — but it should be a conscious choice, not an accident of “buying dips.”
Averaging down lowers average cost only if you still believe the thesis and have dry powder. Without a plan, it often increases concentration into a losing idea.
The Flow Coach on the paper desk flags oversized positions, concentration, and missing stops using your live book — practice listening to those prompts before real capital is involved. Nothing here is financial advice.