Fixed Fractional Position Sizing

Fixed fractional position sizing, often called percent-risk sizing, sets trade size so that a predefined fraction of account equity is at risk on every position. The trader chooses a fraction, measures the distance from entry to stop-loss, converts that distance into money using the pair's pip value, and solves for the lot size that makes the loss equal the chosen fraction. Because the fraction is applied to current equity, size scales down through a drawdown and back up during recovery, which is the method's main defensive property. It also standardises risk across pairs with very different pip values and volatility, at the cost of requiring a defined stop on every trade.