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You are completely right here. Personally, I treat position sizing as an "adjustable power dial/knob" that can both proportionally increase both the return and risk of a system when need to be. If a certain power level of a system produced a historically tested risk that is unacceptable to the user, then he/she should reduce it proportionally. If the return at this acceptable risk level is unacceptable to the user, then he/she should further improve his system by either having better entries / exits (mainly exits), or be creative in money management techniques and even with the power dial itself. Systems should be compared based on their return/risk ratio. There are many definition of return and risk, so how you define it is up to you.
You are completely right here.
Personally, I treat position sizing as an "adjustable power dial/knob" that can both proportionally increase both the return and risk of a system when need to be. If a certain power level of a system produced a historically tested risk that is unacceptable to the user, then he/she should reduce it proportionally. If the return at this acceptable risk level is unacceptable to the user, then he/she should further improve his system by either having better entries / exits (mainly exits), or be creative in money management techniques and even with the power dial itself.
Systems should be compared based on their return/risk ratio. There are many definition of return and risk, so how you define it is up to you.
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