Position Sizing Methods: Fixed Lots, Fixed Fractional Risk and Drawdowns
Technical revision: 1 October 2026 · Educational materialOn this pageStart with the exposure being controlledUnderstand drawdown recoveryInclude simultaneous exposuresTreat estimated edge cautiouslyBuild an auditable sizing experimentPosition size changes how a sequence of trading outcomes affects an account. It does not turn an unvalidated entry rule into a profitable one. Compare methods using the same trade sequence and clearly stated assumptions. Start with the exposure being controlled MethodWhat stays constantMain limitation Fixed lotsRequested volumeMoney exposure changes with stop distance, symbol and account equity. Fixed cash budgetEstimated account-currency loss to stopThe same amount becomes a larger share of shrinking equity. Fixed fractionalEstimated…