01Definition
Position risk is the loss on one trade. Portfolio risk includes its size and the exposure that can fail alongside it.
02Why it matters
Possible large upside does not compensate for exposure that threatens the entire portfolio.
03What to check
- Loss if the position becomes worthless
- Leverage and obligations beyond the initial capital
- Other positions exposed to the same failure
04Healthy / Dangerous
Healthy
Failure remains tolerable at portfolio level.
Dangerous
An imagined multiple becomes permission for unlimited exposure.
05Beginner mistake
Treating potential upside as its probability.
06Takeaway
A possible 10x does not justify full exposure.
See the idea
- 01
A $1,000 portfolio holds a $100 unlevered position.
- 02
If it becomes worthless, $900 remains, ignoring costs and other changes.
- 03
This illustrates loss exposure; 10% is not a sizing recommendation.
Trace it externally
Use a complete portfolio record, including leverage and linked obligations. Meme Fast does not calculate your maximum portfolio loss.
Go deeper
In the same simplified example, a $100 position appreciating to $1,000 leaves a $1,900 portfolio when the other $900 is unchanged. The position gained $900; the portfolio gained 90%, before costs. Such arithmetic says nothing about the chance of that outcome or whether the displayed valuation can be sold.
Need the basics? Revisit 101A →