The most costly investment mistake you can make is one of the easiest to avoid

In the fast-paced world of financial markets, much attention is given to successful investment choices, but the often-overlooked aspect of sizing decisions can be equally crucial. Victor Haghani and James White shed light on the significance of determining the right trade size. Using real-world examples and gaming simulations, they explore how proper sizing decisions can safeguard wealth and avoid catastrophic losses, offering valuable insights for investors navigating the complexities of risk and return.

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By Victor Haghani and James White

When a trade blows up disastrously, we tend to start with a question: What did the trader get wrong about the investment itself? Shouldn't it have been obvious that demand for a com­pany's product was falling? Or, wasn't it apparent that the recent trend in interest rates couldn't hold forever? The same holds true when things go spectacularly right—everyone looks for evidence of savvy and perception. We're inundated with articles about how the investor saw the potential in a business Wall Street had written off or spotted a danger everyone else had minimized.

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