Advanced Position Sizing

Position sizing is the difference between amateur and professional.

Fixed Percentage Method

Position Size = (Account x Risk%) / (Entry - Stop)

Example

• Account: $10,000
• Risk: 1% = $100
• Stop: 50 pips = $50/lot
• Size = 0.2 lots

Kelly Criterion

Kelly % = W - [(1-W) / R]

• W = Win probability
• R = Win/Loss ratio
• Use half Kelly for safety

Volatility-Based Sizing

• Higher ATR = smaller position
• Lower ATR = larger position
• Normalizes risk

Portfolio Heat

• Total risk across positions
• Maximum 6% total
• Reduce for correlated trades

Pro Tips

1. Never exceed 2% per trade
2. Portfolio heat under 6%
3. Adjust for correlation
4. Smaller during drawdowns
5. Size is more important than entry