The part every market shares: sizing from the stop, the drawdown that decides whether you survive, and the streaks arithmetic promises you.
- Position sizing from the stop, not the account
The size of a trade follows from two numbers — how much of the account you are willing to lose if the stop is hit, and how far away the stop is. Margin has nothing to do with it. The formula, a table of what it gives, and why the mathematicians who solved optimal betting stop at half of it.
5 MIN · REVIEWED OCT 2026
- Drawdown is the number that decides whether you survive
A 50% loss needs a 100% gain to get back to even. The recovery table, how long a losing streak arithmetic promises you at any win rate, why the worst drawdown in a backtest is a floor and not a ceiling, and the gambler's-ruin formula that turns bet size into a probability of going broke.
5 MIN · REVIEWED OCT 2026
- How to read a track record (and the ten ways it lies)
Every performance record you will ever be shown — including this desk's — was assembled by someone who wanted you to look. The regulators' required disclaimers, the biases the academic literature has measured, the arithmetic of small samples, and ten questions that catch most of it.
7 MIN · REVIEWED OCT 2026
- Leverage: the arithmetic of being wrong
Leverage does not change the odds of a trade; it changes what being wrong costs, and the cost is not linear. The recovery table, why a futures contract is leverage whether or not you call it that, what a daily-reset leveraged fund does over a month, what a margin agreement lets the broker do, and why the people who solved optimal bet size stop well short of the maximum.
6 MIN · REVIEWED OCT 2026
Education, not advice. Nothing on this page recommends buying or selling anything, and nothing is a promise of results — every figure is hypothetical. TOTH does not provide investment advice. New to the vocabulary? The glossary has plain definitions.