What does the concentration number measure?

The biggest single event's contribution to the wallet's net realized result: biggest event divided by net total. At 0.6 or above, the record is flagged too concentrated: one outcome carries so much of the total that no single figure computed from the record can be separated from that one event. The flag is about readability, not about the wallet's character.

How can concentration be higher than 1?

When the biggest winning event is larger than the whole net result because other events netted negative. A wallet whose biggest event contributed 150 units while everything else lost 50 units nets 100, and its concentration is 150 / 100 = 1.5. Values above 1 are real and observed; they mean the record is even more top-heavy, not that the math broke.

Why do more positions not clear the flag?

Because the flag is about proportion, not count. Adding 200 tiny positions to a record whose net result still comes from one event leaves the same problem: the headline figure remains an echo of that single outcome. The only thing that clears a concentration flag is a record whose result no longer depends on one event.

Concentration

The answer first

Concentration measures how much of a wallet's net realized result comes from its single biggest event. At 0.6 or above, the record is flagged too concentrated: every summary statistic computed from it, including a great-looking realized edge, is mostly an echo of one outcome, so none of them can be read as skill.

The intuition, with one worked example

Take a made-up record. A wallet nets $100 across 50 resolved positions, and $80 of it came from one event. Concentration is 80 / 100 = 0.8, above the 0.6 cap, so the record is flagged. Whatever its edge and win rate say, you are mostly looking at one good call (or one lucky one; the record cannot tell you which). Now make the same wallet's biggest event worth $150 while everything else lost $50 combined. The net is still $100, and concentration is 150 / 100 = 1.5. The ratio exceeds 1 whenever the biggest win is larger than the whole net result because the rest of the book lost money. Values above 1 are real and observed on live records, and they mean extremely top-heavy, not broken math.

The actual method

The ratio is the biggest single event's realized result divided by the net realized result. It is not bounded to [0, 1] by design; it is null when the net result is not positive, since the share of a non-positive total is not meaningful.
The 0.6 cap is an operator-set conservative floor, reused from the cohort screen in the skilled-wallet registry. It is deliberately not tuned per wallet.
In the four-state verdict, the concentration check runs before the edge is consulted, so a flagged record can never reach skilled on the strength of a good interval.
More positions do not fix a concentration flag. Only a record whose net result stops depending on one event clears it.
A cousin check runs on categories: when more than 60% of a record sits in one market category, the evidence grade in the cohort deliverable is capped and the dependence travels as a named caveat.

Where you see this on the site

The analyzer reports the concentration value with every read, and the verdict chip flips to too concentrated when it crosses the cap. The same flag drives the board annotations, the badge, the API state, and the binding caveat column in the enterprise deliverable. The glossary page is /learn/concentration-flag.

What this does NOT mean

A concentration flag is not an accusation and not a verdict on the wallet. Concentrating on one high-conviction event can be a legitimate style; the flag says only that the resulting record cannot be distinguished from one lucky outcome, so we decline to read it as skill. A flagged record can even have an interval that clears zero and it stays flagged, because the structural weakness outranks the number. And the flag is not permanent: it describes the record as it stands, and a record that broadens its base of resolved results reads differently.

Next lesson: Edge Score

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