Half-position rule
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Definition
A risk-management discipline of halving nominal position size when opening a second trade that is materially correlated with an existing open position.
Half-position rule in plain English
When you open a second trade that tends to move in step with a trade you already have, you're secretly doubling down on the same bet even though it looks like two different positions — so if that shared idea is wrong, both lose at once. The half-position rule says: when the new trade is materially correlated with the open one, cut its normal size in half to keep your total risk from quietly ballooning. Imagine you already bet on one basketball team; betting on their teammate's scoring too isn't really a fresh, independent wager — it's more of the same, so you stake less. It's a simple discipline to stop "different" trades from stacking into one oversized gamble.
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