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    Position Sizing-TTrades Edu

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    The document discusses different options for position sizing when trading. It begins by showing how different win rates and risk:reward ratios impact profitability. It then outlines three main position sizing options: fixed contracts, fixed dollar amount risked per trade, and fixed percentage of account risked per trade. Examples are provided to illustrate how the number of contracts would vary under the fixed dollar and percentage approaches to maintain the same dollar amount of risk for different trade scenarios. Maintaining an appropriate position size relative to risk is important for achieving profitability over time.

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    Position Sizing-TTrades Edu

    Uploaded by

    tailor
    38 views9 pages
    The document discusses different options for position sizing when trading. It begins by showing how different win rates and risk:reward ratios impact profitability. It then outlines three main position sizing options: fixed contracts, fixed dollar amount risked per trade, and fixed percentage of account risked per trade. Examples are provided to illustrate how the number of contracts would vary under the fixed dollar and percentage approaches to maintain the same dollar amount of risk for different trade scenarios. Maintaining an appropriate position size relative to risk is important for achieving profitability over time.

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    Position_Sizing-TTrades_edu

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    The document discusses different options for position sizing when trading. It begins by showing how different win rates and risk:reward ratios impact profitability. It then outlines three main position sizing options: fixed contracts, fixed dollar amount risked per trade, and fixed percentage of account risked per trade. Examples are provided to illustrate how the number of contracts would vary under the fixed dollar and percentage approaches to maintain the same dollar amount of risk for different trade scenarios. Maintaining an appropriate position size relative to risk is important for achieving profitability over time.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pdf or txt
    38 views9 pages

    Position Sizing-TTrades Edu

    Uploaded by

    tailor
    The document discusses different options for position sizing when trading. It begins by showing how different win rates and risk:reward ratios impact profitability. It then outlines three main position sizing options: fixed contracts, fixed dollar amount risked per trade, and fixed percentage of account risked per trade. Examples are provided to illustrate how the number of contracts would vary under the fixed dollar and percentage approaches to maintain the same dollar amount of risk for different trade scenarios. Maintaining an appropriate position size relative to risk is important for achieving profitability over time.

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    of 9

    POSITION SIZING

    Position Sizing

    Win Rate & Risk : Reward

    Position Sizing Options

    Fixed Contract

    Fixed $ / %
    Win Rate & RR

    Win Rate
    20% 30% 40% 50% 60%

    Not Not Not


    1:1 Breakeven Profitable
    Profitable Profitable Profitable

    Not Not
    Risk : Reward Ratio

    1:2 Profitable Profitable Profitable


    Profitable Profitable

    Not
    1:3 Profitable Profitable Profitable Profitable
    Profitable

    1:4 Breakeven Profitable Profitable Profitable Profitable

    1:5 Profitable Profitable Profitable Profitable Profitable

    Assuming Same $ Risk Per Trade

    1
    Position Sizing Options

    Options For Position Sizing

    Fixed Contracts Fixed Dollar Fixed Percentage

    2
    Fixed Contract

    2 NQ Contracts Used In Each Scenario

    2 NQ Contracts
    10 Points Risk
    2 NQ Contracts
    Risk = $400
    20 Points Risk
    Risk = $800

    2 NQ Contracts
    40 Points Risk
    Risk = $1600

    3
    Fixed Contract

    2 NQ Contracts Used In Each Scenario

    2 NQ Contracts
    10 Points Risk
    2 NQ Contracts
    Risk = $400
    20 Points Risk
    Risk = $800

    2 NQ Contracts
    40 Points Risk
    Risk = $1600

    -$800 (-1R)
    -$1600 (-1R)
    +$1600 (+4R)
    ------------------------
    -$800 (+2R)???
    4
    Fixed $/%

    Adjust Contracts Per Scenario To


    Maintain Fixed Risk Of $1000

    5 NQ Contracts
    10 Points Risk
    2.5 Contracts
    Risk = $1000
    20 Points Risk
    Risk = $1000 1000/20/10 = 5

    1000/20/20 = 2.5 50 Micros


    1.25 NQ Contracts
    25 Micros 40 Points Risk
    Risk = $1000
    1000/20/40 = 1.25

    12.5 Micros

    $ of defined risk / $ per point / stop size


    5
    Fixed $/%

    Adjust Contracts Per Scenario To


    Maintain Fixed Risk Of $1000

    5 NQ Contracts
    10 Points Risk
    2.5 Contracts
    Risk = $1000
    20 Points Risk
    Risk = $1000 1000/20/10 = 5

    1000/20/20 = 2.5 50 Micros


    1.25 NQ Contracts
    25 Micros 40 Points Risk
    Risk = $1000
    1000/20/40 = 1.25
    -$1000 (-1R)
    12.5 Micros
    -$1000 (-1R)
    +$4000 (+4R)
    ------------------------
    +$2000 (+2R) $ of defined risk / $ per point / stop size
    6
    Resources

    Position Sizing Video

    YouTube

    Discord

    Twitter

    Affiliate Links

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