Position sizing
Managing risk and position sizing is key to success
Introduction
Position sizing is a critical element that can significantly impact your financial outcomes. Proper position sizing ensures that you maximize your gains while minimizing risks, allowing you to stay in the game at all times. Our algorithms are designed to perform optimally, but their effectiveness can be compromised if your position sizing is not aligned with your capital and risk tolerance. This guide and our position sizing calculator are here to help you navigate these crucial decisions.
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Stay-In-The-Game position size calculator
We built this simple calculator to help our clients set a position size that would help them Stay in the game even with the most unlucky timing; starting the algos just before a major drawdown. The calculator is based on our biggest drawdown since start which was from August 1st to November 1st, where our algos lost -€5132 with minimum position sizing.
How much capital (C) are you willing to allocate to run all the algos?
€
How much of that capital are you ready to risk losing?
%
Position size suggestions (1€ contract)
Details
Results per algo since release with position size above
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Setting Your Expectations
Understanding and setting realistic expectations is key to successful algorithmic trading. Our calculator helps you determine the position size you can sustain, factoring in your capital and the maximum drawdown you're willing to endure. Remember, it's not about enduring extreme losses with a stoic mindset; it's about knowing your limits and ensuring you can remain active and unshaken through the ups and downs of trading.
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Dynamic Position Sizing Strategy
As your capital changes over time, so should your position sizing. There are different schools on how to adjust position sizes to reflect changes in your account's equity. What we like to do is to focus on gradual and strategic adjustments. Historically, the best date to increase position sizes has been on November 1st every year. Below is a chart showing our historic results without reinvestment of profits, with reinvestment of profits on January 1st each year and on November 1st each year.
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To increase the position sizes yearly on November 1st is a low effort careful way to increase position sizing. In the below chart we are increasing the position size with 50% every year.
Example of two different cases of position sizing
Below you will see a clear example on how the results and experience can differ between two different traders, starting our algos at the exact same time, with the same amount of capital (but with two different position sizes).
The curve shows the equity of the two traders accounts starting on August 2023 (just before our biggest drawdown period ever), both starting at €5000. Where one of the traders started the algos with moderate position sizing of 0.5x 1€ and the other trader started the algos with 1€.
As you can see one of the traders blew his account at the start of November, just at the bottom of the drawddown. The other trader endured the drawdown, stayed in the game and have now 7 months after start 100.4% gain since start.
Disclaimer
​While our position sizing calculator and strategies offer a strong foundation, remember that trading involves risks, and past performance is not indicative of future results. Staying informed, adaptable, and realistic about your trading expectations and risk management practices is essential for long-term success. Our platform provides ongoing education, resources, and support to help you refine your strategies and manage risks effectively.