📖William Gann
Position Sizing Discipline
Size positions based on conviction and risk.
The size of your position should reflect your conviction and the risk involved. Never bet so large that a single mistake can wipe out your portfolio.
🏠 Everyday Analogy
📖 Core Interpretation
W.D. Gann views portfolio construction as risk architecture. Allocation, position sizing, and rebalancing rules determine whether you can stay disciplined across market regimes.
💎 Key Insight：Proper position sizing prevents catastrophic losses.
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❓ Why It Matters
Without portfolio rules, decisions become reactive and concentrated. Sustainable returns come from controllable risk exposure, not one-off bets.
🎯 How to Practice
Set target allocation by risk tolerance, rebalance by rules rather than headlines, and prevent hidden concentration from dominating portfolio behavior.
⚠️ Common Pitfalls
Diversifying superficially without true risk balance
Skipping rebalancing rules and drifting style
Judging portfolio health by short-term returns only
📚 Case Studies
1
Pre-Crash Speculation in U.S. Equities (1929)
A trader buys stocks on margin in mid-1929, ignoring Gann’s rules on overtrading, trend analysis, and protective stops.
✨ Outcome：Severe losses in the October crash; portfolio wiped out due to no stop-loss and failure to follow trend-reversal signals.
2
Crash of 1983—87 Bull Market Reversal (1987)
An investor rides the strong 1980s bull market, but unlike peers, applies Gann’s rules: pyramids cautiously, sets stops, and watches time and price cycles.
✨ Outcome：Capital mostly preserved in October 1987 crash; limited drawdowns and quick recovery enabled by disciplined exits.
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