Kelly Criterion

Originally developed for gambling, the Kelly Criterion determines the optimal size of investments to maximize long-term growth. It uses probabilities of success and the ratio of potential gains to losses.

Best for: Experienced investors comfortable with mathematics and statistical concepts.

Equal Weight

Allocates the same percentage of capital to each position, creating a simple, diversified portfolio without bias toward any single investment.

Best for: Beginners or those preferring simplicity and diversification.

Confidence Weighted

Allocates more capital to positions with higher confidence signals, allowing stronger convictions to have more impact on returns.

Best for: Investors who want a balance between equal weight and more concentrated approaches.

Stage Weighted

Allocates based on the market cycle stage of each security, increasing exposure to those in optimal stages for growth.

Best for: Investors seeking to capitalize on market cycle timing.

Max Risk Per Trade

Limits the percentage of your portfolio that can be lost on any single position. Lower values (1-2%) are conservative, while higher values (10%+) are more aggressive.

Beginner recommendation: 1-3%

Intermediate recommendation: 3-7%

Max Portfolio Risk

Caps the total risk exposure across your entire portfolio, ensuring that even in worst-case scenarios, losses remain within your tolerance.

Beginner recommendation: 15-20%

Intermediate recommendation: 20-30%

Max Position Size

Prevents over-concentration by limiting how much of your portfolio can be allocated to any single position.

Beginner recommendation: 5-8%

Intermediate recommendation: 8-15%

Max Positions

Controls portfolio diversification by setting the maximum number of securities to hold. More positions increase diversification but may dilute returns.

Beginner recommendation: 10-15 positions

Intermediate recommendation: 15-30 positions

Accumulation

Early stage where informed investors begin buying while prices are relatively low. Volatility decreases and a price floor forms.

Strategy: Begin building positions with moderate allocations.

Markup

Price rises consistently with higher highs and higher lows. Public participation increases and momentum builds.

Strategy: Maximize position sizing for strongest opportunities.

Distribution

Selling begins by informed investors while the public remains optimistic. Price range narrows and momentum slows.

Strategy: Begin reducing position sizes and taking profits.

Decline

Prices fall, often rapidly, with lower lows and lower highs. Sentiment turns negative.

Strategy: Minimize exposure or exit positions while monitoring for new accumulation signs.

Factor-Based Investing

DIONYSUS incorporates factor exposure analysis to optimize portfolios based on market anomalies like value, momentum, quality, and volatility that have historically generated excess returns.

Key benefit: Targeting specific return drivers while maintaining balanced risk exposure.

Dynamic Position Sizing

Rather than static allocation, this approach adjusts position sizes based on changing market conditions, volatility, and correlation structures between assets.

Implementation: Use Stage Weighted allocation with higher position limits during confirmed markup phases.

Drawdown Minimization

This strategy prioritizes minimizing the depth and duration of portfolio drawdowns over absolute returns, leading to smoother equity curves.

Settings: Lower Max Portfolio Risk (15-20%) with Confidence Weighted allocation to reduce volatility.

Volatility Targeting

Adjust overall portfolio exposure to maintain a constant level of volatility, increasing exposure during low-volatility periods and reducing it during high-volatility periods.

Required: Regular rebalancing with attention to the VIX and individual security volatility metrics.