howto: risk free position sizing

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Position sizing  is important in long term invetsment,  It should be large enough to impact your investments but small enough to keep your account intact in case of a catastrophe investment.


Zyne recommended position sizing sits at 20 to 25% per investment target.
At 20%-25% you will have around 5-6 positions at fully invested.


For $100,000 total investment capital the math works out like this:


$20,000 per investment target A


 If the investment target A  goes up 50% , the Return on Investment is $10,000
 If the investment target A goes down 30% , the Loss on Investment is  $6,000


Win: $100,000 + $10,000   = $110,000      (10% return on total capital)
Loss:  $100,000 - $6,000  =  $94,000      (6% loss on total capital)


Due to Zyne's adherance to investing in value, the loss should rarely be over 50% per target investment.


Risks of 20% position sizing =  the returns won't be overwhelming but steady.
Rewards of 20% position sizing= Caps total investment target loss at 20% of capital, keeps you in the game.