EM FX sizing during political shifts - a tough lesson
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I had a rough one last year trying to scale into a long $BRL position. My conviction was high on a post-election rally, but I got too aggressive with my initial sizing. The market didn't give me the clean break I anticipated; instead, it chopped around for weeks, testing earlier support levels repeatedly. Every dip felt like an opportunity to average down, but I was just adding to a losing position that was consuming an outsized portion of my risk budget. I ended up cutting the trade for a much larger loss than necessary, simply because I didn't respect the time it can take for political risk to fully price in, and my position size didn't allow me the breathing room to weather the volatility. Should have started smaller and built into it if the thesis played out, rather than front-loading my exposure.