Position sizing might be the most important function of risk mangement in the investment world. What allocation do I place on any particular stock in my portfolio? How much commodities and currencies do I want to own and how are they correlated? What is the potential draw down with this particular asset allocation? Position sizing is the key. Unfortunately, position sizing requires a great deal of skill, common sense and experience. Hopefully this great read helps:
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.