Shrink your position size, not your process.
One of the biggest mistakes during corrections? Abandoning what works or sizing up to chase back losses. The fix is simple: adjust exposure, not discipline.
1. Confirmed uptrend: Normal sizing when breakouts work and leadership expands.
2. Choppy correction: Cut positions to 25-50% of normal. Failed setups and volatility demand smaller bets.
3. After a follow-through day: Start small. Scale only when buys start working.
Here's the math:
• 10% position × 8% loss = 0.8% portfolio hit
• 5% position × 8% loss = 0.4% portfolio hit
Same loss. Half the damage.
Reducing size doesn't mean lowering standards. Still focus on relative strength, clean setups, improving breadth. If nothing qualifies, cash is fine.
Your entry rules, exits, and stock selection stay the same regardless of conditions.
A follow-through day isn't a guarantee. Let price action and leadership confirm the turn.
The market will deliver new setups. Make sure you're positioned to take them.
One of the biggest mistakes during corrections? Abandoning what works or sizing up to chase back losses. The fix is simple: adjust exposure, not discipline.
1. Confirmed uptrend: Normal sizing when breakouts work and leadership expands.
2. Choppy correction: Cut positions to 25-50% of normal. Failed setups and volatility demand smaller bets.
3. After a follow-through day: Start small. Scale only when buys start working.
Here's the math:
• 10% position × 8% loss = 0.8% portfolio hit
• 5% position × 8% loss = 0.4% portfolio hit
Same loss. Half the damage.
Reducing size doesn't mean lowering standards. Still focus on relative strength, clean setups, improving breadth. If nothing qualifies, cash is fine.
Your entry rules, exits, and stock selection stay the same regardless of conditions.
A follow-through day isn't a guarantee. Let price action and leadership confirm the turn.
The market will deliver new setups. Make sure you're positioned to take them.