Position Sizing Discipline: Planned vs Actual Analysis
Position sizing is where theory meets reality—and for most traders, reality falls short. The gap between your planned position size and your actual execution reveals critical behavioural patterns that directly impact your bottom line.
The Sizing Gap
When you plan a trade, you calculate the appropriate position size based on your risk rules. When you execute, emotional factors intervene:
Practice—Process tracks both your planned and actual position sizes, then analyses the gap between them.
How Sizing Discipline Is Measured
For each trade, the system compares:
A deviation of +20% means you sized 20% larger than your rules dictated. A deviation of -30% means you undersized by 30%.
The Deviation Distribution
The deviation distribution chart shows how your sizing decisions spread around zero (perfect adherence). A healthy distribution is:
Common problematic distributions:
Impact Analysis
Practice—Process calculates the financial impact of your sizing deviations:
Oversizing Cost
When you oversized on losing trades, how much extra did you lose compared to disciplined sizing? This figure is often sobering.
Undersizing Cost
When you undersized on winning trades, how much profit did you forfeit? This opportunity cost is less visible but equally important.
Net Impact
The net impact combines both effects. Most traders find that sizing indiscipline is a net negative because oversizing on losers costs more than oversizing on winners gains (due to asymmetric psychology—we oversize when stressed and undersize when cautious).
Sizing by Context
The analysis breaks down deviations by context:
After Wins vs After Losses
Do you size up after winning (confidence) or after losing (revenge)? Both patterns are common and both are dangerous when they override your plan.
By Volatility
Do you size correctly in calm markets but deviate during volatile sessions? Many traders unconsciously reduce size when they should be maintaining discipline.
By Confidence Level
If you rate confidence 9 and then oversize by 40%, your confidence rating is influencing your sizing beyond what your rules allow. The plan should dictate size, not gut feeling.
Improving Sizing Discipline
Use Calculated Sizes
Let Practice—Process calculate your position size based on:
Display this number prominently before each entry.
Pre-Commit to Size
Record your intended position size in the pre-trade notes. After execution, compare. The simple act of writing it down reduces deviation.
Review Weekly
In your weekly review, examine any trade where deviation exceeded plus or minus 15%. Identify the trigger and create a rule to prevent recurrence.
Automate Where Possible
If your broker supports it, use position size calculators or order templates that enforce your risk rules mechanically. Remove the decision from the emotional moment of execution.
Position sizing is the most direct lever you have on your risk. Bring the same rigour to sizing that you bring to entries and exits—the decomposition data will show you exactly where the gaps lie.