Most accounts are not lost on bad trades — they are lost on bad sizing. These four frameworks keep a losing streak survivable.
FIXED-FRACTIONAL SIZING: Risk a constant percentage of equity per trade — commonly 1%. As the account grows, position size grows with it; as it shrinks, exposure falls automatically, smoothing the equity curve.
DEFINING YOUR STOP FIRST: Decide where the trade is wrong before you decide how big it is. Your stop distance and your risk budget together determine size — never the other way around.
CORRELATION AWARENESS: Three correlated longs are one big position wearing a disguise. Treat correlated exposure as a single risk unit so a single news event cannot hit every position at once.
THE DAILY LOSS LIMIT: Set a maximum daily loss — typically 2–3% of equity. Hit it and stop. This single rule prevents most blow-up scenarios.
