Position sizing & safety
How big each trade is — and the circuit breakers that stop a bad day compounding.
Fixed vs risk-based sizing
Fixed sizing gives every trade the same size — a set percent of equity. Risk-based sizing works backward from your stop: it sizes the position so that, if the stop is hit, you lose a fixed percent of equity. Wider stops get smaller positions and tighter stops get larger ones, keeping risk per trade constant.
Risk per trade & max position
Risk per trade is the slice of equity you're willing to lose if the stop hits — risking 1% of $10,000 means a $100 maximum loss on that trade. A max-position cap is a hard ceiling on position size as a percent of equity, a backstop so risk-based sizing can't produce an oversized trade after a very tight stop.
Tiered sizing
Tiered sizing scales the position up or down based on an indicator — for example trade smaller when volatility is high, or larger when a trend signal is strong, by applying a weight multiplier when an indicator is above or below a threshold.
Circuit breakers
Account safety halts new trades before a bad day compounds. A max-drawdown breaker stops when equity falls a set percent from its peak; a daily loss limit stops after losing a set percent in one day, then resets; max concurrent positions caps how many trades can be open at once. These protect the account, not the individual trade.