Question 1

Overview

Accepted Answer

| Mode | Description | Best For | |------|-------------|----------| | **Fixed Amount** | Same dollar amount per trade | Beginners | | **Fixed Units** | Same number of units/contracts | Futures | | **% of Account** | Percentage of current balance | Most strategies | | **ATR-Based** | Size based on market volatility | Volatility-adaptive | | **Kelly Criterion** | Optimal fraction based on edge | Advanced | | **Risk-Based** | Size based on SL distance | Risk management | | **Recovery** | Increase s

Question 2

1. Fixed Amount

Accepted Answer

Allocate a fixed dollar amount to each trade. | Parameter | Example | |-----------|---------| | Amount | $1,000 | Every trade uses exactly $1,000 regardless of account size or market conditions.

Question 3

2. Fixed Units

Accepted Answer

Trade a fixed number of units/contracts. | Parameter | Example | |-----------|---------| | Units | 0.5 BTC | Always buy/sell exactly 0.5 BTC per trade. Common for futures with fixed contract sizes.

Question 4

3. Percentage of Account

Accepted Answer

Allocate a percentage of the current account balance. | Parameter | Example | |-----------|---------| | Percentage | 10% | With a $10,000 account → $1,000 per trade. As the account grows/shrinks, so does the position size. This naturally compounds wins and reduces exposure during drawdowns.

Question 5

4. ATR-Based

Accepted Answer

Size the position based on Average True Range to normalize risk across different volatility conditions. | Parameter | Example | |-----------|---------| | ATR Period | 14 | | Risk per Trade | 2% of account | | ATR Multiplier | 2.0 | Position size = (Account × Risk%) / (ATR × Multiplier) Higher volatility → smaller position; lower volatility → larger position. This keeps the dollar risk roughly constant.

Question 6

5. Kelly Criterion

Accepted Answer

Calculate the mathematically optimal position size based on your strategy's historical win rate and average win/loss ratio. | Parameter | Example | |-----------|---------| | Kelly Fraction | 0.5 (half-Kelly) | Kelly % = Win Rate − (1 − Win Rate) / (Avg Win / Avg Loss) > **Tip:** Full Kelly sizing is very aggressive. Most practitioners use **half-Kelly** (multiply by 0.5) or **quarter-Kelly** for more conservative sizing.

Question 7

6. Risk-Based

Accepted Answer

Calculate position size so that if the stop-loss triggers, you lose exactly a specified percentage of your account. | Parameter | Example | |-----------|---------| | Risk per Trade | 1% of account | | SL Distance | (from stop-loss setting) | Position size = (Account × Risk%) / SL Distance% With a $10,000 account, 1% risk, and 2% SL → position = $5,000. This mode requires a stop-loss to be configured.

Question 8

7. Recovery (Martingale & Variants)

Accepted Answer

Increase position size after losing trades to recover losses faster. | Parameter | Example | |-----------|---------| | Base Size | 10% of account | | Progression | Martingale / Linear / Custom | | Multiplier | 2.0 (Martingale) or Step (Linear) | | Max Steps | 5 | See [Recovery Mode](/help/recovery-mode) for detailed configuration. > **Warning:** Recovery/Martingale modes significantly increase risk. A series of consecutive losses can lead to very large positions and catastrophic drawdowns. Use w

Question 9

Choosing the Right Mode

Accepted Answer

| Strategy Type | Recommended Mode | |--------------|------------------| | Beginner / Simple | Fixed Amount or % of Account | | Risk-focused | Risk-Based | | Volatility-adaptive | ATR-Based | | Proven strategy with known edge | Kelly Criterion (half) | | DCA / Grid strategies | Fixed Amount | | Aggressive recovery | Recovery (with max steps!) |

Question 10

FAQ

Accepted Answer

**Q: Which mode is best for beginners?** A: **Percentage of Account** (10-20%) is the best starting point. It's simple and automatically adjusts as your account changes. **Q: Does position sizing affect backtest results significantly?** A: Absolutely. Position sizing has the largest impact on risk-adjusted returns after the entry/exit logic. The same strategy can be profitable or ruinous depending on sizing. **Q: Can I change sizing mode without re-creating the backtest?** A: No, backtests are i

Question 11