Fixed fractional vs fixed lot size

The two methods in plain terms

Position sizing is how you decide how big each trade is. Two common methods are fixed lot and fixed fractional.

Fixed lot size means you trade the same volume on every trade, whatever your balance is. A lot is the standard unit of trade volume on platforms such as MetaTrader 5.

Fixed fractional position sizing means you risk the same percentage of your current balance on every trade. The lot size is calculated each time from three inputs:

• the money you are willing to lose (your chosen percentage of the balance)
• the distance from entry to stop loss
• the value of a pip (the smallest standard price step) for that instrument

The step-by-step calculation is on the position sizing page. How to choose the percentage is covered in risk per trade.

How fixed lot behaves

With a fixed lot, the money at risk depends only on the stop distance. The balance does not change it.

• Wide stops risk more. A trade with a wide stop risks more money than a trade with a tight stop, even though both use the same lot.
• Losing streaks get heavier. As the account shrinks, each loss takes a bigger share of what is left.
• Winning streaks get lighter. As the account grows, the same lot becomes a smaller share of it.

The result is linear: profit and loss build up in roughly equal money steps. This is simple to follow and easy to record in a trading journal. The weak point is that it does not slow down when the account is in trouble.

How fixed fractional behaves

With fixed fractional sizing, the money at risk follows the balance.

• After losses, trades get smaller. Each loss reduces the balance, so the next trade risks less money. This slows the fall during a losing streak.
• After wins, trades get larger. Each win raises the balance, so the next trade risks more. This is the compounding effect.
• Every trade carries the same weight. Because you size by the stop, a wide-stop trade and a tight-stop trade risk the same share of the account.

There is a cost. Since each loss is taken from a smaller base, getting back to the starting balance needs a larger percentage gain than the percentage lost. The drawdown recovery calculator shows this. Compounding also works in both directions. A strategy with negative expectancy still loses money under fixed fractional sizing. It loses more slowly in money terms, but it still loses.

Fixed lot vs percentage risk: side by side

Neither method creates an edge. Sizing only changes how the results of your entries and exits are spread over time. If the strategy itself does not have a positive expectancy, no sizing rule will fix it.

Compare both in the simulator

The simulator runs a Monte Carlo model of a fixed-risk strategy. It generates many random trade sequences from your inputs and shows the spread of outcomes and drawdowns. It is a model, not a forecast.

A fair way to compare the two methods:

1. Enter a win rate and an average reward-to-risk that match your journal, not your hopes. The break-even win rate and risk-reward ratio pages help you check that the pair makes sense.
2. Keep the same number of trades for both runs.
3. Run percentage risk at your chosen level.
4. Then set the risk so the fixed-lot case matches what your lot would risk on the starting balance.
5. Compare the median outcome, the worst runs, and the maximum drawdown. Do not look only at the best paths.

The worst runs usually tell you more than the average. If the deep drawdowns in the model would make you stop trading or break your rules, the risk level is too high for you, whatever method you use. The risk of ruin page explains how the chance of losing most of the account grows as risk per trade rises.

Practical limits

• Minimum lot. On a small balance, fixed fractional sizing may produce a lot below the broker's minimum lot size. You then either skip the trade or accept more risk than planned. Check the current minimum lot for your account in the Exness personal area or on the official site.
• Rounding. Lot sizes are rounded to the allowed step, so actual risk is close to your target but not exact.
• Correlated trades. Opening several trades that move together multiplies the real risk. This applies to both methods. See correlation risk.
• Gaps. A price gap can jump past your stop, so the real loss can be larger than planned. See gap and weekend risk.
• Volatility-based stops. If you set stops with ATR (average true range, a measure of how far price typically moves), fixed fractional sizing fits naturally. See ATR position sizing.

Leveraged forex and CFD trading can lose money fast under either method. Before trading real money, read regulation and safety. Then write your sizing rule into a personal risk plan.

Frequent questions

Is fixed fractional safer than fixed lot?

It slows losses during a drawdown because trades shrink as the balance falls. It does not remove risk, and a high percentage per trade can still cause deep drawdowns.

Does compounding mean faster profits?

Only if the strategy has a positive expectancy, and even then results vary widely between runs. With negative expectancy, compounding works against you.

Why does my fixed lot risk change from trade to trade?

Because the money at risk depends on the stop distance and the pip value. A wider stop with the same lot means more money at risk.

Can I mix both methods?

Some traders use a fixed lot on a small account and switch to percentage risk later. Whatever you choose, test it in the simulator and on a demo account first.

How is this different from the Kelly criterion?

Kelly is a formula for picking the fraction itself. It often gives aggressive sizes. See Kelly criterion.