[Soultrader]

Position sizing is one of the key elements of money management and trading. Here are some models used to determine size.

1. Fixed Size: The number of contracts you trade is fixed at each trade. For example, 2 contracts per trade.

2. Fixed Dollar Amount Of Equity: The number of contracts you trade is determined by the amount of your trading capital. For example, you choose to trade 1 contract per $10,000.

3. Fixed Risk: Your position size depends on the percentage you are willing to risk. For example, if you are willing to risk 2% per trade on a $10,000 account, this is $200. This can be 4 YM contracts using a 10 point stop per trade or 2 YM contracts using a 20 point stop.

4. Generalized Ratio: This changes the rate of increase in the number of contracts or shares with increasing profits.

The latter 3 methods increases size as profit or account size increases. This is known as the antimartingale method. The antimartingale method takes advantage of a winning system or methodology. Any trader with an edge and a winning setup should use a antimartingale method.

A martingale method is a gamblers method. Decreasing the amount of risk after a win and increasing risk after a loss. Gamblers will tend to double up their betting stakes after a loss to break even. Traders should use a antimartingale method in their trading.