Fixed Fractional Sizing

Fixed fractional sizing is a money management technique where a constant percentage of the total account equity is risked on every single trade. This approach automatically adjusts the position size as the account grows or shrinks, providing a compounding effect on profits.

If the account balance increases, the dollar amount risked on the next trade increases, and if it decreases, the risk amount scales down accordingly. This method is highly effective for protecting capital during losing streaks, as it prevents the trader from betting too much when the account is depleted.

It is a cornerstone of disciplined trading because it enforces a consistent risk profile regardless of market conditions. By avoiding the temptation to increase position sizes after a series of wins, traders can maintain long-term sustainability.

It is a simple yet powerful tool for systematic risk control.