Strategy
Bankroll management
Rules for how much of your capital to risk per bet or trade so that losing streaks do not end the game.
Most professional guidance is to risk 1 to 3 percent of bankroll per bet, less on long shots, and to treat the bankroll as money you can afford to lose entirely. Kelly gives a theoretical maximum; fractional Kelly gives a practical size.
In leveraged futures the same idea becomes position sizing by stop distance: decide the dollar loss you accept, divide by the distance to your stop, and that is your size. Traders who skip this step are the ones whose liquidations show up in the data.
Discipline about size is more predictive of survival than skill at picking direction.
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Frequently asked questions
- What does "Bankroll management" mean?
- Rules for how much of your capital to risk per bet or trade so that losing streaks do not end the game.
- Why does bankroll management matter for prediction markets?
- Discipline about size is more predictive of survival than skill at picking direction.