Fixed lot vs fixed fractional risk in scalping
Posted: Wed Oct 28, 2026 5:10 am
Two ways of sizing trades: always use the same lot size, or size each trade so the amount risked is a fixed percentage of the account. Both are common, and both have consequences.
Fixed lot sizing is simple. Position size doesn't change with stop distance or account balance, so risk per trade varies with the stop. A 5 pip stop and a 15 pip stop carry very different dollar risk. Over time, as the account grows or shrinks, the risk as a percentage of equity drifts.
Fixed fractional sizing normalises risk. Each trade risks, say, 0.5% of equity regardless of stop distance. Larger stops get smaller positions. As the account grows, position sizes grow in proportion, producing compounding growth, and during drawdowns, sizes shrink automatically, slowing losses.
For scalpers with variable stop distances, fixed fractional sizing gives a more consistent risk profile and more meaningful statistics. R-multiples become comparable across trades.
The costs are complexity and rounding issues on small accounts, as discussed earlier.
For strategies where the stop distance is set by ATR, fixed fractional sizing happens almost naturally: wider stops in volatile periods lead to smaller positions, keeping dollar risk steady. In a fixed-lot system, the same volatility swing quietly doubles or halves risk.
A quick comparison: backtest the same entries with fixed 0.10 lots and with 0.5% risk per trade. The equity curves usually differ markedly, with the fixed-fraction version smoother in drawdowns and compounding faster in good stretches.
Which sizing method is used, and has the choice affected results or behaviour?
Fixed lot sizing is simple. Position size doesn't change with stop distance or account balance, so risk per trade varies with the stop. A 5 pip stop and a 15 pip stop carry very different dollar risk. Over time, as the account grows or shrinks, the risk as a percentage of equity drifts.
Fixed fractional sizing normalises risk. Each trade risks, say, 0.5% of equity regardless of stop distance. Larger stops get smaller positions. As the account grows, position sizes grow in proportion, producing compounding growth, and during drawdowns, sizes shrink automatically, slowing losses.
For scalpers with variable stop distances, fixed fractional sizing gives a more consistent risk profile and more meaningful statistics. R-multiples become comparable across trades.
The costs are complexity and rounding issues on small accounts, as discussed earlier.
For strategies where the stop distance is set by ATR, fixed fractional sizing happens almost naturally: wider stops in volatile periods lead to smaller positions, keeping dollar risk steady. In a fixed-lot system, the same volatility swing quietly doubles or halves risk.
A quick comparison: backtest the same entries with fixed 0.10 lots and with 0.5% risk per trade. The equity curves usually differ markedly, with the fixed-fraction version smoother in drawdowns and compounding faster in good stretches.
Which sizing method is used, and has the choice affected results or behaviour?