How to Set Position-Sizing Rules in Your Sheet So One Bad Trade Cannot Wreck Your Portfolio
Most retail position-sizing decisions fail because they are made in the moment, on emotion, and never written down. A 4 percent allocation feels safe the first time and reckless the third. The fix is a one-time setup in your spreadsheet that runs the same sizing rules every time.
Most retail position-sizing decisions fail because they are made in the moment, on emotion, and never written down. A 4 percent allocation feels safe the first time and reckless the third. Without a written rule, your sizing changes with how confident the pitch felt, with how much you slept the night before, and with how badly the previous trade worked out. The fix is a one-time setup that runs the same sizing rules every time, regardless of how the story sounds that morning.
The buy-dip and stop-loss triggers handle the entry and exit. Sizing handles the bet.
On Wednesday we walked through a buy-the-dip trigger — the rule that fires when a name you already own drops a fixed percent from its 30-day high. On Thursday we walked through a stop-loss trigger — the rule that fires when a name you already own drops a fixed percent from your entry cost. Both rules handle moments. Sizing handles the bet itself.
Sizing is the more important of the three rules because it caps the damage when the other two fire on a name that turns out to be wrong. A 4 percent position sized into a name that triggers the 8 percent stop-loss costs you 0.32 percent of your total portfolio. The same thesis at 15 percent sizing costs 1.2 percent. The trigger fires on the same condition either way, but the portfolio damage scales with sizing, not with the trigger. That is why sizing is the rule you write first, and the rule you never edit.
The sizing model
Every row in your sheet represents one open position. The sizing cell in that row tells you whether the position is at your target allocation, under your target, or oversized relative to your target. The rule has to be a single formula that returns one of three states, because a rule that requires you to interpret anything is a rule you will not run consistently.
=IFS( IVS_BROKERAGE("value","AAPL") / IVS_BROKERAGE("value","ALL") > 0.05, "OVERSIZED — trim back to 4% target", IVS_BROKERAGE("value","AAPL") / IVS_BROKERAGE("value","ALL") < 0.02, "UNDERWEIGHT — add to reach 4% target", TRUE, "OK" )Read it left to right. If the position is more than 5 percent of your total portfolio, the cell prints OVERSIZED — trim back to 4% target. If the position is less than 2 percent of total, the cell prints UNDERWEIGHT — add to reach 4% target. Otherwise it prints OK. The rule fires on a single condition every time. There is no judgment for you to apply on the day.
Four rules that make a position-sizing rule work
Rule 1: target is 2 percent to 5 percent of total portfolio per name. Most retail investors who blow up their portfolio do it on a single oversized position. The specific number depends on how many names you hold — a 10-name portfolio can run 8 percent per name and stay diversified, a 40-name portfolio needs 2 percent to keep any single loss manageable. Pick a number in the 2 to 5 percent range, apply it to every position, and never change it without changing the whole rule.
Rule 2: target is a percentage, not a fixed dollar amount. Fixed dollar amounts feel safer because they keep the trade size constant in your head, but they let a winning position grow into 15 or 20 percent of the portfolio without rebalancing, which is the same problem as not sizing at all. A fixed percentage rebalances naturally as the portfolio grows. When a position doubles in price and crosses the 5 percent threshold, the sizing rule fires and tells you to trim. That trim is what keeps the portfolio diversified.
Rule 3: rebalance on the 1.5x threshold, not on the 1.0x threshold. The mistake most retail investors make is treating the target as a hard line. They see 4.9 percent and ignore it, then see 5.1 percent and trim back to 4.0 percent on a day when the position is up 20 percent intraday. The trim fires at the worst possible moment. The rule closes that gap by setting the trigger at 1.5x target (6 percent on a 4 percent target) and the underweight trigger at 0.5x target (2 percent on a 4 percent target). The 2 percent buffer gives the position room to breathe.
Rule 4: execute the trim with a market-on-open order, not intraday. The hardest part of any sizing rule is the gap between seeing the trigger fire and pressing sell. The natural temptation is to wait for confirmation that the price has stabilized, which is the same as waiting for the bounce that makes the trim smaller. The rule closes that gap by executing at the next session open, the same way the stop-loss rule from yesterday closes the panic-execution gap. Slippage is small. The avoided regret is large.
What this changes
The first time the sizing rule fires, you feel the friction. You hold a position that is 6.2 percent of your portfolio and the cell prints OVERSIZED. You sell the excess at the next session open. The spreadsheet logs the trade and the target row is reset to 4.0 percent. The next time the rule fires, you feel less. The third time, you feel almost nothing. You execute because the rule says to, and the math does the work that the conviction used to do.
That is the whole point. Sizing removes the third-largest source of retail investing error: holding a position past the size your portfolio can actually carry. The buy-dip rule from Wednesday removes the first. The stop-loss rule from Thursday removes the second. Together with the sizing rule from today, you have a complete loop. Build the three rules once. Run them forever. The spreadsheet stays out of the news cycle so you can.
InvestSheet syncs Fidelity, Schwab, Robinhood, Vanguard, and other major brokerages into a single Google Sheet with live formulas for value, price, and current allocation across every account. The buy-dip trigger, the stop-loss trigger, and the sizing rule all run on the same row. Set up all three rules in 30 minutes today and let the spreadsheet run the portfolio.
Frequently asked questions
What is the difference between position sizing and a buy-the-dip trigger?
A buy-dip trigger fires when price falls below a reference level and tells you to add to a position you already hold. Position sizing tells you how much of your portfolio to allocate to that position in the first place. The two rules operate at different moments — sizing is the rule you apply before the trade, the buy-dip trigger is the rule you apply after you already own the name. Sizing is the more important of the two because it caps the damage when a buy-dip trigger fires on a name that turns out to be wrong.
Should I use a fixed dollar amount or a fixed percentage of portfolio?
For most retail portfolios with 8 to 40 individual names, a fixed percentage between 2 percent and 5 percent of total portfolio value is the more durable rule. Fixed dollar amounts feel safer because they keep the trade size constant, but they let a winning position grow into 20 percent of the portfolio without rebalancing, which is the same problem as not sizing at all. A fixed percentage rebalances naturally as the portfolio grows.
How does position sizing interact with the stop-loss trigger from yesterday?
A 4 percent position sized into a name that triggers the 8 percent stop-loss rule from yesterday costs you 0.32 percent of your total portfolio. The same thesis at 15 percent sizing costs 1.2 percent. The stop-loss rule fires on the same condition either way, but the portfolio damage scales with sizing, not with the trigger. This is why the buy-dip trigger (Jul 30), the stop-loss trigger (Jul 31), and the sizing rule (today) form a complete loop — the trigger tells you when to act, the sizing rule tells you how much.
See your full portfolio across every brokerage in one Google Sheet
InvestSheet syncs Fidelity, Schwab, Robinhood, Vanguard, and other brokerages into a single Google Sheet with live formulas for value, price, and current allocation across every account. The buy-dip trigger from Wednesday, the stop-loss trigger from Thursday, and the position-sizing rule from this post all run on the same row. Free 14-day trial with card upfront, no contract.
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