What are your favorite position sizing methods?

[Ryan L Johnson]

FYI... The green "New comment" button is used to post a description.

Also, you can vote for more than one option, above.

[William Roeder]

1. Just because your car can go 150 MPH doesn't mean you should. Just because you have a lot of margin, doesn't mean you should use it. Control your risk.

   Risk depends on your initial stop loss, lot size, and the value of the symbol. It does not depend on margin or leverage. No SL means you have infinite risk (on leveraged symbols). Never risk more than a small percentage of your trading funds, certainly less than 2% per trade, 6% account total.

   1. You place the stop where it needs to be — where the reason for the trade is no longer valid. E.g., trading a support bounce, the stop goes below the support. Then you compute your lot size.

   2. AccountBalance * percent/100 = RISK = OrderLots * (|OrderOpenPrice - OrderStopLoss| * DeltaPerLot + CommissionPerLot) (Note OOP-OSL includes the spread, and DeltaPerLot is usually around $10/PIP, but it takes account of the exchange rates of the pair vs. your account currency.)

   3. Do NOT use TickValue by itself - DeltaPerLot and verify that MODE_TICKVALUE is returning a value in your deposit currency, as promised by the documentation, or whether it is returning a value in the instrument's base currency.
                MODE_TICKVALUE is not reliable on non-fx instruments with many brokers - MQL4 programming forum (2017)
                Is there an universal solution for Tick value? - Currency Pairs - General - MQL5 programming forum (2018)
                Lot value calculation off by a factor of 100 - MQL5 programming forum (2019)

   4. You must normalize lots properly and check against min and max.

   5. You must also check Free Margin to avoid stop out

   6. For MT5, see 'Money Fixed Risk' - MQL5 Code Base (2017)

   Most pairs are worth about $10 per PIP. A $5 risk with a (very small) 5 PIP SL is $5/$10/5 or 0.1 Lots maximum.

2. Martingale is not a strategy. It's a betting system.

   Hedging, grid trading, same as Martingale.
             Martingale, Hedging and Grid : MHG - General - MQL5 programming forum (2016)

   Martingale, guaranteed to blow your account eventually. If your strategy is not profitable without, it is definitely not profitable with.
             Martingale vs. Non Martingale (Simplified RoR vs Profit and the Illusions) - MQL5 programming forum (2015)

   Why it won't work:
             Calculate Loss from Lot Pips - MQL5 programming forum (2017)
             THIS Trading Strategy is a LIE... I took 100,000 TRADES with the Martingale Strategy - YouTube (2020)
             Does a safe Martingale exist ? - Trading Systems - MQL5 programming forum (2010)

[Ryan L Johnson]

William Roeder #:
Martingale is not a strategy. It's a betting system.

Frankly, nothing in this poll/thread is a strategy─these are merely position sizing methods.

Having said that, the infiltration of gambling into the industry of trading is very curious. Another example of this is the Kelly Criterion which originated in the gambling industry. The most flagrant infiltration is the U.S. Commodities and Futures Trading Commission's jurisdiction over "prediction markets." How something as "gambley" as predicting the amount of time that a political speech will last became a commodity, I will never understand. Similarly, a U.S. court of law declared that a Blackjack tournament was a game of skill instead of luck, thereby allowing the winner to avoid the prizes and awards tax.

We also must consider the gray areas such as a long-term positional trader who adds to her/his profitable position(s) during retracements. This is definitely not Martingaling nor gridding but certainly is pyramiding.