How much to trade
Position sizing is where risk management becomes a number. The same signals can compound smoothly or blow up an account depending only on how much you put on each trade. These pages explain every sizing method a trader needs — fixed and fixed-fractional, the percentage-risk model, the Kelly criterion and the safer half-Kelly, volatility- and ATR-based sizing, equal-risk, dynamic and portfolio-level sizing — each with its formula, when it fits, and how it changes your drawdown and risk of ruin, grounded in NSE lot sizes and margins.
Position Sizing: Position sizing is the rule that converts a trade decision into a quantity, and it is as decisive as the entry for your results. Methods range from fixed size and fixed-fractional risk to the percentage-risk model (risk a set fraction of capital, sized off the stop distance), the Kelly criterion and half-Kelly, and volatility- or ATR-based sizing that scales exposure to market conditions. Because size compounds, it governs a strategy's growth rate, its deepest drawdown and its probability of ruin — which is why professionals size for the worst case, not the best.
Fixed Position Size
Position sizingFixed position size is the simplest sizing rule, in which every trade uses the same fixed quantity of lots, contracts or shares regardless of the tra…
Fixed Fractional Position Sizing
Position sizingFixed fractional position sizing sets each trade so that a loss to the stop costs a constant fraction of current account equity, computing the quanti…
Percentage Risk Model
Position sizingThe percentage risk model sizes every trade so that a loss to the stop costs a pre-set percentage of account equity, most commonly the 1-to-2-percent…
Kelly Criterion
Position sizingThe Kelly criterion is the bet fraction that maximises the long-run geometric growth rate of capital given a known edge, computed as f* = W − (1 − W)…
Half Kelly
Position sizingHalf Kelly bets half of the full Kelly fraction, 0.5 × f*, trading a small reduction in theoretical long-run growth for a large reduction in volatili…
Volatility Position Sizing
Position sizingVolatility position sizing sets the quantity inversely to an instrument's volatility so that each position contributes a similar amount of expected r…
ATR Position Sizing
Position sizingATR position sizing uses the Average True Range as a volatility measure to place a stop a set multiple of ATR away and to compute the quantity so tha…
Equal Risk Allocation
Position sizingEqual risk allocation sizes positions so that each contributes the same amount of risk to the portfolio, rather than the same amount of capital, deli…
Dynamic Position Sizing
Position sizingDynamic position sizing adjusts the risk taken per trade over time in response to changing account equity, market volatility or recent performance, r…
Portfolio Position Sizing
Position sizingPortfolio position sizing governs the total risk across all open positions at once, using aggregate heat limits, correlation adjustments and margin c…