Position Sizing – Part 2 | From Backtest to Leverage | The Long & The Short Ep.20

Описание: Welcome to The Long & The Short – a show where you can expect an honest take on trading, something you won’t hear elsewhere.

I’m your host, Sandeep Rao (SEBI Registered Research Analyst – INH000013059).

In this episode, we move from concepts into practical implementation by using real backtest data to build a position sizing framework that can actually survive real market conditions.

We revisit the Nifty and Gold trend following backtest and extend the Part 1 question: how position sizing changes when trading a single leg versus a combined uncorrelated portfolio.

The episode explains how to read backtest metrics like return and drawdown, why raw drawdown numbers are often unrealistic, and why applying a 2x buffer helps account for real market loss clustering. We also show why leverage should be evaluated using contract value, how combining assets like Nifty and Gold can reduce portfolio drawdowns, and how to build a true 50:50 portfolio using contract value ratios instead of lot count.

The episode closes by explaining why option buying requires separate backtests due to different payoff structures and decay dynamics. The core idea is simple: position sizing is about survival first, returns later.

📌 Chapters:
00:00 Part 2 Intro & Part 1 Summary
02:13 Nifty Only Trend Following & 2x Drawdown Reality
03:22 Position Sizing Using Backtest + Leverage Impact
04:55 Nifty + Gold Combined Portfolio & 50:50 Allocation Logic
10:15 Options Position Sizing & Part 3 Preview

If you prefer reading, we've written a post about this episode here: https://inthemoneybyzerodha.substack....

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