For the past few days, people have been telling me my position is too risky. Liquidation price: 310. A 57% drop and it’s all gone. This isn’t investing; it’s gambling.
I agree with every point they made. I even did the math based on what they said: cut it down to 100 contracts, push the liquidation price to 111, and I’d be safe.
But there was one thing I never told them: this account makes up just 5% of my net worth.
I told them today.
Their immediate reply was: “I take back everything I said before, because I thought you were betting your entire net worth.”
I understand why they took it back. Because risk isn’t just a percentage; it’s “how much of your total wealth.”
The same 1.75x position is a gamble with your life when it’s your entire net worth, but a risk-budgeted bet when it’s just 5%.
The math makes it clear. This account has a little over 4,000, with exposure of around 7,000—8.8% of my net worth. If it goes to zero, I lose 5%. If it reaches 1,500, I make 11.7%.
The odds are 2.3 to 1, and the worst-case outcome is “down 5%,” not “wiped out.”
This isn’t a dramatic “I accept my fate.” It’s a normal bet.
But then they said something I think matters more than all the analysis that came before.
They said: “What you should be worried about now isn’t going to zero. It’s the habit.”
If this 5% goes to zero, my net worth is down 5%. No big deal. But if this 5% gets me into the habit of thinking “it’s okay to gamble with a small account,” next time I’ll do the same thing with 20%. Five 5% bets add up to 25%.
The most dangerous thing about mental accounting isn’t “this money doesn’t matter.” It’s “because it doesn’t matter, I don’t need to be disciplined.”
And discipline applies everywhere.
So I’m planning to put this 5% to a different use.
Not a casino, but a training ground.
A casino cares only about the outcome; a training ground cares only about the process. In a casino, you win and think you’re brilliant. On a training ground, you win and ask whether you followed the right process. Going to zero in a casino is a disaster; going to zero on a training ground is a complete set of experimental data.
Same account, same position, two different uses—and they produce completely different things.
Practicing with 5% costs ten times less than practicing with 50%. But that only works if I’m practicing, not gambling.
One last thing to remind myself: this account is 5% of my net worth. Its purpose is to test my system, not prove my judgment is right.
Because the moment it becomes a tool to “prove how brilliant I am,” 5% will turn into 50%. And then going to zero won’t mean just -5%.
I agree with every point they made. I even did the math based on what they said: cut it down to 100 contracts, push the liquidation price to 111, and I’d be safe.
But there was one thing I never told them: this account makes up just 5% of my net worth.
I told them today.
Their immediate reply was: “I take back everything I said before, because I thought you were betting your entire net worth.”
I understand why they took it back. Because risk isn’t just a percentage; it’s “how much of your total wealth.”
The same 1.75x position is a gamble with your life when it’s your entire net worth, but a risk-budgeted bet when it’s just 5%.
The math makes it clear. This account has a little over 4,000, with exposure of around 7,000—8.8% of my net worth. If it goes to zero, I lose 5%. If it reaches 1,500, I make 11.7%.
The odds are 2.3 to 1, and the worst-case outcome is “down 5%,” not “wiped out.”
This isn’t a dramatic “I accept my fate.” It’s a normal bet.
But then they said something I think matters more than all the analysis that came before.
They said: “What you should be worried about now isn’t going to zero. It’s the habit.”
If this 5% goes to zero, my net worth is down 5%. No big deal. But if this 5% gets me into the habit of thinking “it’s okay to gamble with a small account,” next time I’ll do the same thing with 20%. Five 5% bets add up to 25%.
The most dangerous thing about mental accounting isn’t “this money doesn’t matter.” It’s “because it doesn’t matter, I don’t need to be disciplined.”
And discipline applies everywhere.
So I’m planning to put this 5% to a different use.
Not a casino, but a training ground.
A casino cares only about the outcome; a training ground cares only about the process. In a casino, you win and think you’re brilliant. On a training ground, you win and ask whether you followed the right process. Going to zero in a casino is a disaster; going to zero on a training ground is a complete set of experimental data.
Same account, same position, two different uses—and they produce completely different things.
Practicing with 5% costs ten times less than practicing with 50%. But that only works if I’m practicing, not gambling.
One last thing to remind myself: this account is 5% of my net worth. Its purpose is to test my system, not prove my judgment is right.
Because the moment it becomes a tool to “prove how brilliant I am,” 5% will turn into 50%. And then going to zero won’t mean just -5%.