Losing streaks are not a possibility, they are a schedule. A strategy that wins 55% of the time will produce five losses in a row about once every 60 trades — not as bad luck but as arithmetic. Position sizing is how you arrange to be solvent when it happens.
The rule: risk a fixed small percentage of the account per trade — 1% is the standard. The mechanics: position size = (account × 1%) ÷ (entry-to-stop distance in price, converted to money per unit). A $10,000 account risking 1% has $100 on the line; if the stop sits 50 pips away and a mini-lot makes each pip worth $1, the size is two mini-lots. The stop distance sets the size — never the other way around.
Why 1% and not 10%? Ten consecutive losses at 1% leaves 90.4% of the account — annoying, survivable, recoverable. At 10% it leaves 34.9%, which needs a +187% run just to get home. Drawdown arithmetic is brutally asymmetric, and it's the reason “risk big to win big” has a 100% long-run mortality rate.
Fixed-percent sizing also makes every result meaningful: at 1% per trade, an accumulated +10R on the track record equals +10% on the account, non-compounded — the conversion is exact. Our auto-execution sizes positions this way from each broker's real tick values, but the arithmetic above works with a calculator and any broker on earth.
Educational content, not financial advice. Trading involves substantial risk of loss. Figures referenced from the live track record change as the record grows — that's what makes them worth referencing.
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Educational analysis, not financial advice. Trading involves substantial risk of loss.