Position Sizing

What is Position Sizing?

Position sizing is how you determine how large a trade is relative to your account. It's not just about picking a number — it's about ensuring that no single trade can seriously damage your account, while still making the expected return worthwhile.

Getting this right is arguably more important than your entry strategy. A trader with an average entry strategy and excellent position sizing will outperform a trader with a great entry strategy and poor position sizing over any meaningful sample size.

The Four Methods

Fixed Percentage (Recommended for most traders)

You risk a fixed percentage of your account on every trade.

How it works: If your account is £10,000 and you risk 1%, you risk £100 per trade. If your stop is 50 pips, you size your position so that 50 pips of movement = £100 loss.

Why it works: Your position size automatically scales with your account. As you win, you trade bigger. As you lose, you trade smaller. This compounds gains and limits drawdown naturally.

Common risk percentages:

• Conservative: 0.5%–1%
• Moderate: 1%–2%
• Aggressive: 2%+ (not recommended unless your strategy has been thoroughly tested)

Setting it up: Go to Risk Management → Position Sizing, select Fixed %, and enter your risk percentage. Use the stepper to adjust in 0.1% increments.

Fixed Lot

You trade the same position size every time, regardless of stop distance or account size.

How it works: You decide on a fixed number of lots (or contracts, or shares) and trade that amount every time.

When it's used: Some prop firm traders or systematic traders use this where position size is dictated externally. It's less adaptive than fixed percentage but simpler to calculate in real time.

Setting it up: Select Fixed Lot and enter your lot size. Adjust in 0.01 increments.

Fixed Amount

You risk a fixed cash amount per trade regardless of account size.

How it works: If you've decided to risk £200 per trade, every trade risks £200 — whether your account is £5,000 or £50,000.

When it's used: Some traders prefer this when building a trading account from scratch with a fixed monthly funding contribution, or when their strategy has a very wide range of stop distances and they want consistent cash exposure.

Setting it up: Select Fixed Amount, choose your currency, and enter the amount.

Custom

Your position sizing method doesn't fit any of the above — describe it in your own words.

Examples of custom methods:

• "1% of max drawdown remaining — risk reduces as I approach my drawdown limit"
• "Tiered approach: 1% for A-grade setups, 0.5% for B-grade setups"
• "Kelly Criterion adjusted for win rate and average R"

Setting it up: Select Other and type your method description.

Drawdown Limits and Position Sizing Work Together

Position sizing alone doesn't protect you from a catastrophic session. You also need drawdown limits. Even with 1% risk per trade, five losing trades in a row during one session is a 5% drawdown in a day.

Set your drawdown limits in the section directly below Position Sizing. See Risk Management Overview for more.

Common Mistakes

Risking too much per trade — The emotional pull to "make it back quickly" after a loss leads many traders to increase position size at the worst possible time. Fix your percentage and don't deviate.

Not adjusting for stop width — Fixed lot traders often don't account for the fact that a wide stop requires a smaller position to risk the same amount. If your stop is twice as wide as usual, your position should be half the size.

Changing your method too often — Pick one approach, stick with it long enough to evaluate it, then update deliberately. Chopping and changing destroys the ability to know what's actually working.