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I don’t care how smart you are, how good your track record is or how many billions you’ve made — if you don’t respect position sizing, the market will humble you.
Leopold Aschenbrenner is an investor, former OpenAI researcher and founder of the investment fund Situational Awareness. He graduated as valedictorian from Columbia University at age 19, then became known for his writing and investing focused on artificial intelligence.
Very impressive.
His fund reportedly posted a 483% year-over-year return with billions in profits — also very impressive…
And then his fund blew up entirely within three to four days. This wasn’t some reckless amateur. Aschenbrenner is clearly a brilliant guy who’s already made hundreds of millions and will likely be fine in the long run.
But that’s exactly the point.
Even the smartest investors can destroy their accounts in no time if they overleverage. If it can happen to them, it can happen to anyone.
I’ve Been There Too
I’m not throwing stones here. I’ve made the same mistake. When I first started trading, I grew my account from $2,000 to $25,000 in a couple of months. I felt invincible and started taking on more risk because the rapid gains convinced me I could do no wrong.
A couple of months later, that account was down to about $500, a long, demoralizing way down.
I got too excited, became overleveraged and gave a few bad market days the power to erase nearly everything. That’s the danger of letting early success change your risk tolerance. A winning streak can make an oversized position feel reasonable right up until the market crushes you.
The past week or so aside, we’ve been in a period of heightened volatility that’s probably here to stay, which makes position sizing even more important. You can have the best setup in the world, but if you’re sizing too big, one bad move can take you out of the game.
The Risk Check I Use Before Every Trade
A trader’s risk-management tip…
Before entering a position, imagine the money is already gone. Then ask yourself whether you’re genuinely OK with that loss.
If I’m considering putting $500 into a trade, I tell myself, “I just lost $500 — am I okay with that?” If the answer is yes, that’s probably a position I can manage without letting fear take over.
I can follow my plan, respect my levels and avoid making emotional decisions.
If I’m risking $100 or $10,000 and the thought of losing it makes me uncomfortable, the position is too large. It doesn’t matter how confident I feel about the setup. The size needs to come down.
This simple exercise keeps me grounded, but it works best as part of a structured trading plan. Before entering, know how much you’re willing to lose, where you’ll exit and what would invalidate the setup.
Then have the discipline to follow those rules.
You don’t need to be the smartest person in the room to succeed as a trader. You need to respect risk and preserve enough capital to keep playing. The market doesn’t care about your track record — it only cares whether you positioned yourself to survive the next move.
Graham Lindman
Graham Lindman Trading
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.Â
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