His name was Daniel. Seventeen winning months straight, a 68% win rate, and a genuinely solid edge. Then, over six weeks, he gave back fourteen months of profit — not because his strategy failed, but because he had no idea how much he was actually risking per trade. He was flying blind. No spreadsheet, no records, no maths. Just vibes and momentum, until both ran out.

The brutal truth is that position sizing kills more accounts than bad signals ever will. The fixed fractional method — risking a set percentage of current equity per trade — is the foundation most serious traders build on. With a $50,000 account and a 1% risk rule, maximum loss per trade is $500. If the account drops to $47,000, that figure recalculates to $470. The maths protects you automatically, but only if you track it.

CONCEPTFixed fractional sizing means your risk scales with your account — losses shrink drawdowns, wins compound faster.
WARNINGTrading fixed dollar amounts instead of fixed percentages accelerates ruin during losing streaks.
KEY IDEAA spreadsheet converts your trading journal into a living risk management system — not just a record.

A well-built tracking spreadsheet captures six columns at minimum: date, entry price, stop price, position size, result in dollars, and running equity. From those six columns, a trader can calculate risk-per-trade as a percentage, average winner versus average loser, and the critical metric most ignore — maximum consecutive drawdown. That number tells you whether your current position sizing would have survived your own worst historical streak.

$50k $60k $72k $85k 0 25 trades 50 Fixed fractional (1%) Fixed dollar amount Equity growth over 50 trades — same win rate, different sizing

The Kelly Criterion offers a more aggressive sizing formula — f* = (bp - q) / b, where b is the reward-to-risk ratio, p is win probability, and q is loss probability. A trader with a 55% win rate and 1.5:1 reward-to-risk gets a Kelly fraction of roughly 18% — far too aggressive for live trading. Most practitioners use half or quarter Kelly precisely to manage volatility, something your spreadsheet makes visible through drawdown analysis. Tracking equity curve slope alongside compounding mechanics shows exactly when sizing should be scaled back.

Build the spreadsheet before you need it. Once you're inside a drawdown is the worst time to start learning what your numbers actually mean.

The trader who tracks everything makes better decisions. The trader who tracks nothing just hopes — and hope has a terrible win rate.

This content is for educational purposes only and does not constitute financial product advice. Past performance is not indicative of future results. Profit Logic Ltd (ACN 688 669 936) accepts no responsibility for errors or omissions in this content or anywhere on this website. Always seek advice from a licensed financial adviser before making investment decisions.