> ## Documentation Index
> Fetch the complete documentation index at: https://docs.supermisson.fun/llms.txt
> Use this file to discover all available pages before exploring further.

# Managing Risk

> Position sizing, diversification, time decay, and the mental frameworks that keep you solvent. Read this before you size up.

# Risk management — the boring stuff that keeps you alive

The best prediction market traders aren't the ones with the best picks. They're the ones who survive long enough for their edge to compound. Every word here is about survival.

## Rule zero

<Warning>
  Never bet more than you can afford to lose. Prediction markets are binary — your position goes to `$1` or `$0.` There is no middle ground. Size accordingly.
</Warning>

## The rules

<Steps>
  <Step title="Size your positions deliberately">
    A good starting framework: no single position should be more than **5-10% of your total trading capital**. If you have `$1,000,` your max bet on any single market is `$50-100.`

    Why? Even high-conviction trades can be wrong. A string of bad outcomes shouldn't blow up your account. The math is simple — if you bet 50% on one market and lose, you need a 100% return just to break even.
  </Step>

  <Step title="Diversify across markets and categories">
    Don't put everything on politics. Don't put everything on crypto prices. Spread across categories so a single domain surprise doesn't wipe you out.

    Correlated bets are the silent killer. Five bets on different elections might feel diversified, but one political upset could tank all of them simultaneously.
  </Step>

  <Step title="Understand time decay">
    Markets near expiry behave differently. A market resolving tomorrow with YES at `$0.50` is extremely volatile — it's going to `$1` or `$0` within hours. A market at `$0.50` with 3 months to go has time to move gradually.

    Near-expiry markets are higher risk, higher reward. Make sure your position size reflects that.
  </Step>

  <Step title="Use limit orders for better entries">
    Market orders execute immediately but you pay the spread. Limit orders let you set your price and wait. In less liquid markets, the difference can be significant — a `$0.03` better entry on a `$100` position saves you `$3,` which is real money at scale.
  </Step>

  <Step title="Treat AI confidence as one input, not gospel">
    Supermission's AI signals are powerful research tools. But high confidence from the AI does not mean guaranteed outcome. The AI can be wrong — systematically, even — on novel situations it hasn't seen before.

    Use signals as a starting point for your own analysis. The best trades happen when the AI's reasoning aligns with your own independent thinking.
  </Step>
</Steps>

## Mental frameworks

<Accordion title="Think in expected value, not outcomes">
  A trade that wins 60% of the time at 2:1 payoff is a great trade, even when it loses. If you bought YES at `$0.40` and the market resolved NO, that doesn't mean the trade was bad — it means you were on the right side of expected value and variance went against you this time. Keep making positive EV bets.
</Accordion>

<Accordion title="Set mental stop-losses">
  Before entering a trade, decide: "If the price moves to X against me, I'm out." Don't let losses compound because you're hoping for a reversal. The market doesn't care about your entry price.
</Accordion>

<Accordion title="Track your results honestly">
  Use the Portfolio tab to review your closed positions. Look for patterns. Are you consistently wrong on a certain category? Are you entering too late? Are you sizing too large on low-conviction trades? The data is there — use it.
</Accordion>

<Accordion title="Beware the illusion of control">
  You're betting on real-world outcomes that you don't control. A perfectly analyzed trade can still lose because the world is unpredictable. Accept that variance is inherent. Your job isn't to be right every time — it's to be right more often than the market price implies.
</Accordion>

<Tip>
  The goal is to stay in the game. One spectacular trade means nothing if you blow up on the next three. Consistency, position sizing, and emotional discipline beat conviction every time.
</Tip>