Position Sizing Is the Strategy — Everything Else Is Detail

Give two traders the same signals — the same entries, the same exits, the same instruments — and let them size differently. Six months later they will not have the same account, and often not even the same sign. The signal decides where you trade. The size model decides whether you are still trading.

Risk per trade, not lots per trade

Most accounts size in lots: one lot, because one lot feels normal. A size model starts from the other end — the amount you accept losing if the stop is hit — and works back to the position. One percent at risk on a 20-pip stop and one percent at risk on a 60-pip stop are very different positions and exactly the same bet.

• Decide the loss you accept on any one trade as a share of the account, before you look at the chart.
• Put the stop where the idea is wrong, not where the loss feels comfortable.
• Size is the accepted loss divided by the distance to the stop. The stop sets the size; the size never sets the stop.

Leverage is a setting. Position size is a decision.

Layal Kassem

Why the losing streak decides it

Every strategy meets ten losses in a row eventually. At one percent a trade that streak costs about a tenth of the account; at five percent it costs about two fifths, and climbing back from a 40% drawdown takes a 67% gain. Same signals, same streak — the size model decides which of the two traders is still there for the next winning run.