Two traders take the same setup. One compounds 30% in a year. The other blows up in a month. Same strategy, same trades. The difference is position size.
Fixed fractional in one sentence
Risk a fixed percentage of current equity on every trade — typically 0.5% to 1%. Not a fixed dollar amount. Not a fixed lot size. A fixed fraction of what's actually in the account today.
The formula
Position size = (Equity × Risk%) / (Stop distance × Pip value)Account of $10,000, risking 1% ($100), with a 25-pip stop on EURUSD ($10/pip per standard lot):
$100 / (25 × $10) = 0.4 lotsDone. Use our position size calculator to skip the math.
Why fixed fractional wins
It does two things automatically: scales you down during drawdowns (so a losing streak doesn't compound into ruin) and scales you up after wins (so good periods compound). Fixed dollar sizing does neither.
The 1% myth
"Pros risk 1% per trade" is folklore. Many professional desks risk 0.25%-0.5% per idea because they take 5-15 trades a week. If you take 20 trades a week at 1% each, a normal -7R losing streak puts you in a 7% drawdown — fine. But a -15R cluster is -15%, and that hurts performance fees and psychology equally.
What your journal should track
Risk-% per trade, account equity at entry, and realized R. If your trading journal can compute average risk-% by setup, you'll find some setups where you instinctively size up — that's where edge or bias lives.
Strategy gets the credit. Sizing keeps the account alive.