Trading involves uncertainty. A strategy’s entry signal is only one part of a trading plan; managing exposure after a position is opened also matters. This article outlines the fixed-fractional approach described in the source. It is educational information, not a profitable strategy or individualized trading advice.
The challenge of trading
Trading is not only about finding an entry point. It also requires deciding how much to risk after opening a position. Technical analysis may help a trader identify a setup, but it does not determine how much capital can safely be put at risk.
Why might an account fail to grow?
The source describes a situation where a trader has a strategy and a high win rate but still sees little account growth. Poor risk and capital management can cause losses to erase earlier gains. A high win rate alone does not show whether a system is profitable; the size of wins and losses and trading costs matter too.
Risk management: a core part of trading
Risk management starts by recognizing that losses can occur and setting limits in advance. It can help define how much may be lost on a trade, but it cannot eliminate risk or guarantee that an account will remain in the market long enough to recover.
The Anti-Martingale philosophy
There are different ways to manage trading capital. The source compares approaches that change position size in response to results.
Martingale versus Anti-Martingale
The source describes Martingale as increasing trade size after losses and Anti-Martingale as reducing size after losses to protect remaining capital. It presents the second approach as preferable. These labels can be used differently by traders, and neither approach guarantees a positive result.
Fixed Fractional: a money-management model
Fixed Fractional is presented as a practical way to apply an Anti-Martingale approach by setting a risk amount relative to capital.
What is Core Equity?
In this article, Core Equity means capital available for trading after deducting the margin tied up in open positions. The amount available can change as positions and account values change.
Risk Amount: set a loss limit
Risk Amount is the maximum amount a trader is willing to lose on a trade under the plan. Decide it before entering, and account for the possibility that execution, gaps, or fees can cause the realized loss to differ.
Position Size: calculate the trade size
Position Size is the amount of an asset or contract to trade. The calculation should correspond to the planned risk amount and the distance to the exit or stop level, as well as contract specifications and costs.
Three steps in the source’s process
The source presents three steps for applying its Fixed Fractional method:
- Call Equity: identify capital available for use. The source uses this label in its step list, while it defines “Core Equity” in the section above.
- Risk Amount: set the maximum planned loss for the trade.
- Position Size: calculate the amount to trade.
How the Fixed-Fractional system is described
The source says that a fixed-fractional process can encourage consistency and reduce decisions driven by emotion. Rules still need to be applied carefully and do not prevent market losses.
Example: two consecutive trades
The example starts with 6,000 baht of “Call Equity” and a planned risk of 300 baht. If the first trade loses, the source says the next trade size is reduced automatically to limit exposure. If the first trade is profitable, the next trade size may increase slightly. No formula or exact subsequent position size is supplied, so the example does not show a guaranteed account outcome.
Position sizing can help express a risk limit, but it does not make trading safe or profitable. Check the calculations, contract rules, leverage, fees, and your ability to absorb a loss before using any trading method. For a free consultation, contact the team on LINE.
