How long is the course?

6 chapters · 18 minutes · level: Beginner

Yes. The course is part of Phase 1 — AK1A's foundation education, which is free forever.

AKM1 · Portfolio Management

Position Sizing

Max 5%. Rätt storlek.

📖 6 chapters⏱ 18 min⚡ 230 XP⚖ Weight: —🏷 Portfolio Management

Why this variable is decisive

Position sizing är avgörande för att överleva och växa på den svenska börsen, särskilt med volatila bolag som Klarna och Spotify. Det är en konkret metod som skyddar kapitalet och maximerar avkastningen över tid.

Course overview

11. The fundamentals — why this mattersPosition sizing is crucial for controlling risk and maximizing return over time.3 min
22. Practical applicationPractical application of position sizing requires a systematic methodology that goes beyond simple percentage …3 min
33. Common pitfallsCommon pitfalls in position sizing are often rooted in cognitive biases and emotional misjudgements.3 min
44. AKM1 1.1 integrationIntegrating the AKM1 1.1 model into position sizing creates a dynamic framework where risk calculation directl…3 min
55. Case studiesThe case studies demonstrate how the position sizing strategy is applied in real market scenarios with varying…3 min
66. MasteryMastery in position sizing is about mastering the psychological discipline and the quantitative precision requ…3 min
Total18 min

Chapter	Focus	Time
1. 1. The fundamentals — why this matters	Position sizing is crucial for controlling risk and maximizing return over time.	3 min
2. 2. Practical application	Practical application of position sizing requires a systematic methodology that goes beyon…	3 min
3. 3. Common pitfalls	Common pitfalls in position sizing are often rooted in cognitive biases and emotional misj…	3 min
4. 4. AKM1 1.1 integration	Integrating the AKM1 1.1 model into position sizing creates a dynamic framework where risk…	3 min
5. 5. Case studies	The case studies demonstrate how the position sizing strategy is applied in real market sc…	3 min
6. 6. Mastery	Mastery in position sizing is about mastering the psychological discipline and the quantit…	3 min
Total		18 min

Sample — the first two chapters

1. The fundamentals — why this matters

Chapter 1 of 6 · 3 min

Position sizing is crucial for controlling risk and maximizing return over time.

A portfolio's overall risk is not defined by the number of holdings, but by how much capital is allocated to each individual position. A well diversified portfolio with excessively large positions can still lead to catastrophic losses, while a concentrated portfolio with carefully calibrated sizes can deliver exceptional returns with limited drawdown.

◆

This is the core of professional portfolio management: managing the underlying probabilities and outcomes of each investment, rather than relying on the number of holdings as a measure of safety.

Ignoring position sizing is like sitting at a poker table without understanding the size of the bets in relation to your total cash. You can be right in 60% of cases, but if the 40% you are wrong about are large enough, you will still lose everything. Position sizing is the tool that converts a series of binary outcomes (right/wrong) into a calculated and predictable return profile over time.

Next: 2. Practical application

2. Practical application

Chapter 2 of 6 · 3 min

Practical application of position sizing requires a systematic methodology that goes beyond simple percentage rules.

A robust methodology uses a combination of an absolute stop-loss and percentage risk per position. First, you identify the maximum tolerable loss for the entire portfolio, for example 2%. Next, you calculate the maximum position based on the specific investment's stop-loss level. The formula is: (Portfolio's total capital × Maximum percentage risk per position) / (Purchase price − Stop-loss price). This ensures that each position contributes equally to the portfolio's total risk, regardless of the stock's price level or volatility. A stock with high volatility will automatically receive a smaller position than a stable stock, even if both are considered equally attractive.

For more sophisticated portfolios, optimization models that maximize expected return under a given risk constraint can be used (for example with the help of the Sharpe ratio or Sortino ratio). These models allocate capital based on the correlation that exists between the various holdings, which reduces the portfolio's total risk through diversification.

◆

This does, however, require careful data and often advanced software.

Next: 3. Common pitfalls

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Three perspectives

Peter Lynch

Lynch betonade vikten av att aldrig låta en enskild aktiepost utgöra mer än 10-15% av portföljen. Han menade att även de bästa idéerna kan gå fel och att diversifiering är den bästa försäkringen mot katastrofala förluster.

Benjamin Graham

Benjamin Graham, fadern till värdeinvestering, föreslog att ingen investering bör överstiga 7,5% av portföljen. Han såg detta som ett nödvändigt skydd mot mänskliga felbedömningar och oförutsägbara marknadsrörelser.

AK1A's interpretation

AKM1 använder position sizing som en central del av sin metodik, med en strikt gräns på 5% per position för att säkerställa disciplin och långsiktig avkastning. Detta tillämpas konsekvent oavsett om det handlar om svenska multinationella bolag eller nya, lovande tech-företag.

Exercises

Three exercises to anchor the variable — unfold each one for guidance.

Exercise 1. Explain in your own words: what does Position Sizing measure, and why does it carry — weight in AKM1?

Explain in your own words: what does Position Sizing measure, and why does it carry — weight in AKM1?

Guidance: Max 5%. Rätt storlek.

Exercise 2. Application: find one company where Position Sizing is strong — and one where it is weak. What separates them?

Application: find one company where Position Sizing is strong — and one where it is weak. What separates them?

Guidance: Guidance: see chapter 3 ("3. Common pitfalls").

Exercise 3. Reflection: how would your portfolio be affected if your largest holding failed precisely on Position Sizing?

Reflection: how would your portfolio be affected if your largest holding failed precisely on Position Sizing?

Guidance: Test it in My Portfolio (/min-portfolj) or discuss it in the lab.

Continue the curriculum

Interactive exercises, wave matrices and the AI tutor are found in the lab.

Open AK1A Research Lab See memberships

Related courses in Portfolio Management

Chapter

Focus

Time

1. 1. The fundamentals — why this matters

Position sizing is crucial for controlling risk and maximizing return over time.

3 min

2. 2. Practical application

Practical application of position sizing requires a systematic methodology that goes beyon…

3 min

3. 3. Common pitfalls

Common pitfalls in position sizing are often rooted in cognitive biases and emotional misj…

3 min

4. 4. AKM1 1.1 integration

Integrating the AKM1 1.1 model into position sizing creates a dynamic framework where risk…

3 min

5. 5. Case studies

The case studies demonstrate how the position sizing strategy is applied in real market sc…

3 min

6. 6. Mastery

Mastery in position sizing is about mastering the psychological discipline and the quantit…

3 min

Total

18 min

Sample — the first two chapters

1. The fundamentals — why this matters

Chapter 1 of 6 · 3 min

Position sizing is crucial for controlling risk and maximizing return over time.

◆

This is the core of professional portfolio management: managing the underlying probabilities and outcomes of each investment, rather than relying on the number of holdings as a measure of safety.

Next: 2. Practical application

2. Practical application

Chapter 2 of 6 · 3 min

Practical application of position sizing requires a systematic methodology that goes beyond simple percentage rules.

◆

This does, however, require careful data and often advanced software.

Next: 3. Common pitfalls

Three perspectives

Peter Lynch

Benjamin Graham

AK1A's interpretation

Exercises

Three exercises to anchor the variable — unfold each one for guidance.

Exercise 1. Explain in your own words: what does Position Sizing measure, and why does it carry — weight in AKM1?

Explain in your own words: what does Position Sizing measure, and why does it carry — weight in AKM1?

Guidance: Max 5%. Rätt storlek.

Exercise 2. Application: find one company where Position Sizing is strong — and one where it is weak. What separates them?

Application: find one company where Position Sizing is strong — and one where it is weak. What separates them?

Guidance: Guidance: see chapter 3 ("3. Common pitfalls").

Exercise 3. Reflection: how would your portfolio be affected if your largest holding failed precisely on Position Sizing?

Reflection: how would your portfolio be affected if your largest holding failed precisely on Position Sizing?

Guidance: Test it in My Portfolio (/min-portfolj) or discuss it in the lab.