position-sizing
Position Sizing provides five methods to determine trade size based on account risk, volatility, edge probability, and market liquidity. Fixed fractional sizing—risking a set percentage per trade—is recommended for most traders, while Kelly criterion applies mathematical optimization for quantified edges. The skill combines all methods to apply the most conservative constraint, ensuring your position size aligns with your risk tolerance and market conditions.
Position Sizing calculates optimal trade sizes using fixed fractional, volatility-adjusted, Kelly criterion, and liquidity-constrained methods.
AI-generated summary based on this skill's SKILL.md
Install
agiprolabs/claude-trading-skills/position-sizing · repository language: Python
git clone https://github.com/agiprolabs/claude-trading-skills
cp -r claude-trading-skills/skills/position-sizing ~/.claude/skills/position-sizingFrequently asked questions
AI-generated answers based on this skill's SKILL.md and metadata
How to calculate position size for trading with position-sizing?
Position-sizing calculates optimal trade size using five methods: fixed fractional (risk a set percentage per trade), Kelly criterion (mathematical optimization for quantified edges), volatility adjustment, liquidity constraints, and portfolio limits. Fixed fractional sizing is recommended for most traders. Position-sizing applies the most conservative constraint across all methods, ensuring your position size aligns with your risk tolerance and market conditions.
What is the Kelly criterion position sizing method?
Position-sizing's Kelly criterion method applies mathematical optimization when you have a quantified edge. It calculates optimal position size based on your win probability and risk-reward ratio, helping maximize long-term growth while managing drawdown risk. Kelly criterion is more sophisticated than fixed fractional sizing but requires accurate edge data. Position-sizing combines Kelly with other methods to apply the most conservative constraint.
How does volatility adjusted position sizing work?
Position-sizing normalizes risk across different assets using volatility adjustment. This method scales position size inversely to volatility—reducing size for high-volatility assets and increasing it for stable ones—ensuring consistent risk exposure regardless of market conditions. Combined with account risk percentage and stop loss levels, volatility-adjusted sizing helps maintain portfolio-level risk management across diverse trading strategies.
How much capital should I risk per position?
Position-sizing recommends fixed fractional sizing: risk a consistent percentage of your account per trade (commonly 1-2%). Your position size is calculated by dividing your account risk amount by your stop loss distance. Position-sizing also applies liquidity constraints and portfolio diversification limits to ensure your position size doesn't exceed market depth or violate your portfolio-level position limits.
What constraints does position-sizing apply to low liquidity tokens?
Position-sizing determines maximum position size constrained by pool liquidity, preventing slippage and market impact. For low-liquidity tokens and meme assets, position-sizing sizes positions conservatively by checking available liquidity depth. Portfolio-level position limits and diversification rules further restrict concentration risk. Position-sizing applies the most conservative constraint across all methods, protecting you from illiquid market conditions.
How does position-sizing handle portfolio diversification?
Position-sizing sets portfolio-level position limits and diversification rules to prevent over-concentration. It constrains individual position sizes based on your total portfolio value and diversification targets. Combined with fixed fractional sizing, Kelly criterion, volatility adjustment, and liquidity constraints, position-sizing ensures balanced risk across your portfolio while respecting your account risk tolerance and market conditions.
SKILL.md
rendered from the published skill — quoted content, verbatim
Position Sizing
Position sizing is the single most important risk management decision in trading. Your entry signal determines direction; your position size determines survival. A mediocre strategy with proper sizing will outperform a great strategy with reckless sizing over any meaningful time horizon.
Core principle: Size determines survival, not entries. Two traders with the same signals but different sizing will have wildly different outcomes. The one who sizes conservatively survives drawdowns and compounds capital; the one who oversizes blows up.
Methods Covered
| Method | Best For | Key Input |
|---|---|---|
| Fixed Fractional | General trading, most recommended | Account risk % |
| Volatility-Adjusted | Volatile markets, multi-asset | ATR or realized vol |
| Kelly Criterion | Quantified edge with track record | Win rate + payoff ratio |
| Liquidity-Constrained | Low-liquidity Solana tokens | Pool depth |
| Anti-Martingale | Trend-following strategies | Recent P&L streak |
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File tree — 5 files
skills/position-sizing/SKILL.md
skills/position-sizing/references/practical_guide.md
skills/position-sizing/references/sizing_formulas.md
skills/position-sizing/scripts/portfolio_sizer.py
skills/position-sizing/scripts/size_calculator.py