Advanced Position Sizing
Fixed fractional, Kelly criterion, and volatility-adjusted sizing for professional risk control.
Once you understand expectancy, the next question is: how much do you risk per trade? This module covers the spectrum of position sizing methods — from simple fixed fractional to Kelly criterion — and explains when each approach is appropriate for different account sizes and risk profiles.
Lessons
Fixed Fractional Position Sizing: The Professional Standard
Risk a fixed percentage of your account on every trade. This simple rule, applied consistently, is the foundation of professional capital management.
Kelly Criterion: Optimal Sizing for Known Edges
The Kelly Criterion calculates the mathematically optimal position size for a known edge. But the full Kelly comes with a warning label.
Volatility-Adjusted Position Sizing with ATR
Markets breathe differently in different conditions. ATR-based sizing ensures your risk stays consistent regardless of how fast or slow price is moving.
Portfolio Heat and Correlated Pair Risk
Running 1% risk per trade sounds conservative. Five correlated trades at 1% each is 5% exposure to a single macro event. Portfolio heat management is the risk layer most retail traders never learn.
Scaling In and Scaling Out of Positions Professionally
Position scaling — adding to winners and peeling off profitable contracts — improves risk-adjusted returns when applied with discipline and clear rules.