Nanosizing is the fashionable method to obtain a desirable electrode material for energy storage applications, and thus, a question arises: do smaller electrode materials exhibit better electrochemical performance? In this context, theoretical analyses on the particle size, band gap and conductivity of nano-electrode materials were performed; it was determined that a critical size exist between particle size and electrochemical performance. To verify this determination, for the first time, a scalable formation and disassociation of nickel-citrate complex approach was performed to synthesize ultra-small Ni(OH)₂ nanoparticles with different average sizes (3.3, 3.7, 4.4, 6.0, 6.3, 7.9, 9.4, 10.0 and 12.2 nm). The best electrochemical performance was observed with a specific capacity of 406 C g⁻¹, an excellent rate capability was achieved at a critical size of 7.9 nm and a rapid decrease in the specific capacity was observed when the particle size was <7.9 nm. This result is because of the quantum confinement effect, which decreased the electrical conductivity and the sluggish charge and proton transfer. The results presented here provide a new insight into the nanosize effect on the electrochemical performance to help design advanced energy storage devices.