Position Sizing: What Percent of Your Money per Trade?

• With memecoins, a token can drop to almost zero within minutes (lesson 3.3). Your position size decides how much it hurts when that happens.
• A small size lets you keep playing even after a few losses in a row.
• A consistent size makes your journal notes (lesson 3.4) comparable. If your size goes up and down with your mood, it's hard to tell which strategy actually works.

1. Decide your total degen money: spare money you're ready to lose, separate from your living money (lessons 1.1, 3.3).
2. Decide the maximum percent per trade. This is a personal choice.
3. Position size = degen money × percent per trade.

Illustration (made-up numbers): 2 SOL of degen money, position size calculated from the starting amount, and the worst case where every token drops to zero.

The bigger the percentage, the fewer mistakes you can survive.

Start from the question: in one trade, how much are you ready to lose?

• Illustration: 2 SOL of money, ready to lose at most 1% of it per trade = 0.02 SOL. The cut loss level in your plan is −25% (lesson 3.9).
• Position size = maximum loss ÷ cut loss distance = 0.02 ÷ 25% = 0.08 SOL.
• Note: with memecoins the price can drop faster than your cut loss level (for example in a rug), so the real loss can be bigger than planned. That's why you still keep the position size small.

• Every transaction has a platform fee (GMGN 1% per transaction; Frontrun 1% with cashback, lesson 1.5), plus priority fees and tips.
• Rough illustration (example numbers): say priority fee + tip is about 0.001 SOL per transaction. Buy + sell = about 0.002 SOL. On a 0.02 SOL position, that's already about 10% of the position, before the platform fee. On a 0.2 SOL position, it's about 1%.
• So a position that's too small can also get eaten by fees. Find a size that still makes sense compared with the fees.

• Limit how many positions you have open at once (lesson 3.3). Illustration: 5 positions × 10% = half your money open at the same time.
• A daily loss limit: if you've lost a set amount today, stop (lessons 3.3, 3.12).
• Keep your position size consistent. Don't raise it because you're on a winning streak, and don't raise it to get revenge after a loss (lesson 3.3).
• Lowcap tokens have thin liquidity, so a big position means big slippage and price impact (lesson 3.6).
• Big bundlers or clusters? Ask "am I ready if they all sell together?", then shrink your size (lessons 2.8, 2.9).
• Your money changed? Recalculate your position size regularly, for example during your weekly journal review (lesson 3.4), not on every trade because of mood.

• Going all-in or using a big portion on one token because you're super sure.
• Raising your size after a winning streak, or after a loss to win your money back.
• Using a tiny position until fees eat most of the result.

Position size is the easiest way to shrink your risk. In the market, what we're after is the smallest possible risk, so don't let greed decide how much goes in.
Next up, lesson 3.11: Chart Reading Basics for Degens.
Not financial advice.