Most attention goes to what to buy. Position size determines far more of the outcome. A brilliant idea at 2% of a portfolio and a mediocre idea at 40% will produce results dominated by the second, regardless of which analysis was better.
position size = (portfolio × risk per trade) / distance to invalidation
Decide what fraction of the portfolio you are prepared to lose on this idea, and where the idea is proven wrong. The size follows arithmetically. Conviction does not appear anywhere in the formula, which is the point.
A A$100,000 portfolio with a 1% risk budget means A$1,000 at risk. If the thesis is invalidated by a 20% adverse move, the position is A$1,000 / 0.20 = A$5,000, or 5% of the portfolio. If the invalidation is 40% away, the same risk budget supports only A$2,500.
Common belief
"I am very confident, so I should size up."
What is actually true
Confidence is not calibrated for most people, and it is highest immediately before the errors that matter. Sizing by conviction means your largest losses arrive on the positions you were most certain about — which is exactly the pattern most people report.
This is why the VILIQ paper trading coach grades position sizing separately from profit. A member who made money with 90% of the account in one position gets a poor sizing grade, because the process was poor and the outcome was luck.