Fixed Percent Risk
Risking a constant percentage of your account on every trade, adjusting lot size to maintain consistency
Fixed percent risk is the position sizing method where you risk a predetermined percentage of your account balance on each trade (typically 0.25% to 1%). The lot size is calculated using: Lot Size = (Account Balance × Risk Percent) ÷ (Stop Loss in Pips × Pip Value). This creates two powerful effects: compounding during growth (larger account = larger positions = larger dollar wins) and automatic protection during drawdowns (smaller account = smaller positions = smaller dollar losses). Unlike fixed lot sizes where risk varies with stop loss distance, fixed percent risk ensures every trade has identical proportional exposure regardless of stop loss placement.
✓How to Recognize
- •Formula: Lot Size = (Account × Risk%) ÷ (Stop Loss × Pip Value)
- •Compounding: $10k at 1% = $100 risk → grows to $12k at 1% = $120 risk
- •Protection: during drawdowns, position size automatically scales down
- •Recommended range: 0.25-0.5% for prop firms, 0.5-1% for personal accounts
⚡How to Avoid
- →Rounding lot sizes to "neat" numbers (0.37 → 0.40 destroys consistency over time)
- →Manually adjusting risk percentage during losing or winning streaks
- →Using fixed lot sizes instead (creates inconsistent risk between trades)
- →Skipping the calculation — use a lot size calculator for every single trade