Abstract — Hit rate is overrated. This article translates Soros’s maxim into a payoff-asymmetry operating system: volatility-scaled sizing, positive skew construction, mechanical exits for losers, staged holds for winners, and liquidity-aware gross/net governors—so P&L depends more on magnitudes than on being “right.”

TL;DR (actionable)

• Small, certain losses; large, uncertain wins: exits for losers are pre-committed (level/time), while winners are trailed and allowed to compound.
• Size for skew, not ego: volatility-scaled core + regime/liq gates for gross/net; add on confirmation, not on hope.
• Engineer asymmetry: prefer structures and sleeves that naturally deliver positive payoff skew.

1) What the quote means in a systematic shop

Most investors chase a high hit rate. Soros reminds us that magnitude dominates frequency. We design the process so losers are bounded and quick, winners are unbounded and patient, and portfolio risk adapts to liquidity.

2) Payoff asymmetry: the math behind the mantra

• Expected value (EV) = hit rate × avg win − miss rate × avg loss. Improving avg win / avg loss (the skew) beats squeezing a few extra percentage points of hit rate.
• Convexity: momentum + carry in easy liquidity and RV structures with bounded downside produce naturally skewed payoffs.

3) Sizing framework (Kelly-lite, regime-gated)

• Volatility-scaled core size: target risk parity across sleeves; shrink size as realized vol rises.
• Gross/net bands by liquidity: ~0.6× in contraction, up to ~1.0× in expansion; net exposure conservative until price confirms.
• Stage into strength: add ⅓-⅓-⅓ after favorable confirmation, never while underwater.

4) How to let winners run (and keep them)

• Trailing logic: trail a moving average or structure stop that only tightens in the direction of profit.
• Profit release: scale out in thirds on momentum roll/MA break; keep a core while trend persists.
• Liquidity patience: loosen profit bands when liquidity is improving; tighten when it deteriorates.

5) How to cut losers fast (without debate)

• Level stop: close beyond invalidation exits the position—no averaging down.
• Time stop: if price fails to advance within the signal window, reduce/exit—opportunity cost is risk.
• Drawdown governors: auto-cut sleeve/book gross at preset loss thresholds.
• Funding-stress override: plumbing stress (spreads/basis/haircuts) forces de-gross regardless of P&L.

6) Engineering positive skew by sleeve

• Trend sleeves: confirmation entries, trailing exits, and staging create convexity.
• Carry sleeves: harvest where term structure/funding supports; hedge tails; reduce in liquidity contraction.
• Relative-value: pairs/spreads bound downside and monetize dispersion.
• Expression choice: prefer calendars/spreads/options where path risk is controlled.

7) Case studies (principle-first, abstracted)

Asymmetric win: trend + improving liquidity; staged adds; trailing stop locks gains as move extends. Few wins like this pay for many small losses.

Contained loss: thesis fails to confirm; time stop fires; small debit avoided an eventual larger drawdown. Losses remain rent, not eviction.

8) Checklists

Before entry

• Regime/liquidity identified? (yes/no)
• Vol-scaled size set? (yes/no)
• Level stop + time stop defined? (yes/no)
• Plan to stage adds only on confirmation? (yes/no)

While in the trade

• Trailing stop updated? (yes/no)
• Profit release conditions met? (yes/no)
• Drawdown governor or funding-stress tripwire triggered? (yes/no)

Conclusion

Soros’s edge wasn’t being right more often—it was being paid more when right than he paid out when wrong. In systematic macro that means: size for skew, cut losses by rule, let winners run mechanically, and let liquidity govern patience. Magnitude beats ego.

Questions or diligence? Email us at contact@serapisglobal.com or visit serapisglobal.com.

Compliance: For informational purposes only; not investment advice or a solicitation. Past performance is not indicative of future results.