Glossary › fixed fractional sizing

Trading glossary · advanced

fixed fractional sizing

Always risking the same small slice of your money on each trade, so your bets shrink after losses and grow after wins.

The fuller meaning

Sizing each trade to risk a fixed percentage of current capital, such as 1% or 2%. Bets shrink after losses and grow after gains, giving up some growth compared with the optimal-growth formula in exchange for much smaller drawdowns and room for mistakes in your estimates.

fixed fractional sizing, also called fixed fraction.

Related words

at the money · backtest · backwardation · basis · call option · contango · data snooping · delta · edge · entry trigger