A Forex Trader's Guide to Position Sizing Strategies

A sound trading plan would ideally specify the position size of each trade according to some
objective criteria the trader feels comfortable with.

Popular Forex Position Sizing Strategies

Fixed Lot

• In this strategy, a fixed number of lots are designated for trading regardless of the balance in the account or how much the account fluctuates

Fixed Fractional

• The fixed fractional position sizing strategy typically defines the trade plan’s trading unit as a pre-set fraction of the equity present in the trading account.

Fixed Risk

• In a fixed risk position sizing method, a trader might determine the size for trades made in their account based on the risk of trading in a particular market as assessed by using a suitable risk measure such as volatility.

Fixed Ratio

• In fixed ratio position sizing the key parameter is the delta. This is the dollar amount of profit per contract to increase the number of contracts by one

Never adjust the stop loss to arrive at a desired position size, but instead adjust the size of the
position to meet your risk level and desired stop loss order placement based on your analysis.

Try to keep your Risk per trade within 2% of your Account Equity

Whichever method you use make sure you calculate your position size on each trade based on your individual risk profile

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