Position Sizing: How Much Should You Risk Per Trade?
October 7, 2026 · 6 min read
Position sizing is the decision of how much money to put on each trade. It gets far less attention than entries, signals and strategies, but it decides something more important: how much damage a bad run can do to your account. This article explains the most common sizing methods, shows how losing streaks affect each one, and gives a simple process for choosing your size.
Why position size matters more than you think
Two traders can use the exact same strategy, take the exact same trades, and end up in very different places, only because they sized their trades differently. One survives a losing streak and keeps trading. The other loses most of the account and quits.
Losing streaks are not rare events. Even with a 50% chance of winning each trade, the chance of seeing at least 5 losses in a row somewhere in 100 trades is about 81%. The chance of 7 in a row is about 32%. Your sizing has to be built for those streaks, because they will happen.
Method 1: fixed amount per trade
You trade the same amount every time, for example $10, no matter what your balance is. This is the simplest method and a good place for beginners to start, because it removes decisions during the session.
The weakness is that it does not adjust. If your account shrinks, $10 becomes a bigger share of it, and your risk grows exactly when you can least afford it.
Method 2: fixed percentage per trade
You trade a set percentage of your current balance, for example 2%. On a $500 account, that is $10. If the account drops to $400, the trade size drops to $8. If it grows to $600, the size grows to $12.
This method protects you during losing streaks, because each loss is smaller than the one before. Here is what 10 losses in a row do to an account at different risk levels:
| Risk per trade | Account left after 10 straight losses |
|---|---|
| 2% | about 82% |
| 5% | about 60% |
| 10% | about 35% |
At 2%, a terrible streak hurts but is easy to recover from. At 10%, the same streak leaves you needing to almost triple your account to get back to where you started.
Method 3: sizing per series
Some traders work in series, where the trade size grows after each loss and the series ends at the first win, as in a martingale. Here, the right question is not “how much per trade?” but “how much can I lose if the whole series fails?”
That amount should follow the same logic as the percentage method. If one failed series costs 50% of your account, a single bad sequence ends your trading. If it costs 5%, you can absorb it, take a break, and continue. A practical rule is to decide the amount for one series as a small share of your total trading money, and to put only that amount into the series calculation.
How to choose your size: a simple process
- Start from your trading money, not your savings. This is the amount you have set aside to trade and could lose. See risk management basics.
- Pick a maximum loss per trade or per series. 1% to 2% per trade is a common range. For a series, keep the full-series loss to a small share of your trading money.
- Check it against a losing streak. Ask: if I lose 8 times in a row, or lose 2 full series, where does my account end up? If the answer scares you, the size is too big.
- Write it down and keep it the same for the whole session.
- Review it monthly, not after every trade. Adjust it to your balance on a fixed schedule.
Mistakes to avoid
- Sizing up after a loss to win it back faster, outside of a planned system.
- Sizing up after a few wins because you feel confident.
- Using a size that only works if you do not hit a losing streak.
- Forgetting the payout. With a fixed payout below 100%, a win pays less than a loss costs, so you need to win more than half your trades to break even. See how to calculate your break-even win rate.
The bottom line
Your strategy decides whether you can make money. Your position size decides whether you survive long enough to find out. Choose a size small enough to get through the losing streaks that will come, keep it consistent, and adjust it on a schedule rather than on emotion.
Risk warning: This article is for education only and is not financial advice. Trading involves a high risk of loss. Only trade with money you can afford to lose.
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