Aggressive sizing can damage compounding even when expectancy is positive. This is volatility drag: variance erodes long-run growth.
Arithmetic gain is not compounded gain
A strategy can show positive average outcome while still producing weak or negative compounded growth.
Large drawdowns require disproportionately larger recoveries, reducing geometric progress.
How to detect drag quickly
If geometric growth per trade trends toward zero or negative while expectancy remains positive, risk is likely too high.
This is a classic signal to de-lever before increasing trade frequency or targets.
Practical correction
Reduce risk size first, then rerun simulations under identical assumptions.
Look for smoother percentile paths and lower breach clustering before scaling back up.