Size a position

A position's size decides how much a losing trade costs you. Oathra works the lot size out from the risk you choose, in one of six ways.

Position sizing is how you control risk. The Trade Manager offers 6 sizing models so you can pick the one that fits your strategy.

Risk % of Balance#

Calculates your lot size based on a percentage of your account balance and the distance to your stop loss.

This is the most popular sizing model among professional traders. It ensures every trade risks the same percentage of your account, so a single loss never destroys you.

How it is calculated

Lots = (Balance x Risk%) / (SL in pips x Pip Value)

Example: $50,000 balance, 1% risk ($500), 50 pip SL, pip value of $10 per standard lot. Lots = $500 / (50 x $10) = 0.10 lots.

Ranges

• 0.5% to 1%: conservative, recommended for most traders
• 1% to 2%: moderate risk, standard for experienced traders
• 2% to 5%: aggressive, only for small accounts or high conviction
• Above 5%: very aggressive, high risk of significant drawdown

Things to watch for

Balance does not reflect open trade P&L. If you have large floating losses, your balance looks higher than your real available capital. Consider using Risk % of Equity in that case.

How to improve it

Start at 1% and only increase once you have a proven edge over 100+ trades. The goal is to survive long enough for your edge to play out.

Risk % of Equity#

Same calculation as Risk % of Balance, but uses your equity (balance plus or minus floating P&L) instead of your raw balance.

Equity reflects your true account value right now, including unrealized gains and losses. If you have large open positions in the red, equity-based sizing automatically reduces your next trade's size to protect you.

How it is calculated

Lots = (Equity x Risk%) / (SL in pips x Pip Value)

When equity is higher than balance (open trades in profit), you size up slightly. When equity is lower (open trades in loss), you size down. This creates a natural feedback loop.

Ranges

• Use equity-based when you carry multiple open positions
• Use balance-based when you trade one position at a time

Things to watch for

Equity fluctuates with every tick while trades are open. The lot size is calculated at the moment you submit the order, based on your equity at that instant.

How to improve it

If your equity frequently drops well below your balance, it may indicate you are holding losing trades too long. Review your exit strategy.

Fixed Lot Size#

You enter an exact lot size and that is what gets traded. No calculation, no adjustment. You type 0.50 and 0.50 lots is what opens.

Simple and predictable. Some traders prefer knowing their exact lot size on every trade rather than having it change based on SL distance. It is also useful for accounts with specific lot size requirements.

How it is calculated

No formula. You enter the number directly.

Ranges

• Good for: traders who want simplicity and consistency
• Watch out: risk varies with SL distance since lot size is constant

Things to watch for

With fixed lots, a 20-pip SL risks much less than a 100-pip SL even though the lot size is the same. Your actual risk per trade will not be consistent unless your SL distance is also consistent.

How to improve it

If you use fixed lots, at least check the dollar risk shown in the preview panel before submitting. Make sure it does not exceed your comfortable risk level.

Fixed Dollar Risk#

You enter the exact dollar amount you want to risk on the trade. The Trade Manager calculates the lot size from that dollar amount and your SL distance.

Useful when you think in terms of dollars rather than percentages. If you are comfortable losing $200 on this trade, enter $200 and the lot size adjusts to match.

How it is calculated

Lots = Dollar Risk / (SL in pips x Pip Value)

Example: $200 risk, 40 pip SL, pip value of $10. Lots = $200 / (40 x $10) = 0.50 lots.

Ranges

• Good for: flat dollar budgets and prop firm fixed-risk rules
• Watch out: as your account grows, a fixed dollar amount becomes a smaller percentage

Things to watch for

Unlike percentage-based sizing, fixed dollar risk does not scale with your account. If your account doubles from $50K to $100K and you still risk $500 per trade, you are effectively risking 0.5% instead of 1%. You may want to update the dollar amount periodically.

How to improve it

Review your fixed dollar risk every month or whenever your balance changes significantly. Make sure it still represents an appropriate percentage of your account.

ATR-Based Sizing#

Uses the Average True Range indicator to set your stop loss distance, then calculates lot size from your risk percentage. The SL adapts to current market volatility.

Markets change. A 30-pip SL that works in calm conditions is too tight when volatility doubles. ATR-based sizing widens your stop in volatile markets and tightens it in calm ones, keeping your risk proportional to conditions.

How it is calculated

SL Distance = ATR(period) x Multiplier

Lots = (Balance x Risk%) / (SL Distance in pips x Pip Value)

Example: ATR(14) is 80 pips, multiplier is 1.5, so SL = 120 pips. With $50K balance at 1% risk, lots = $500 / (120 x $10) = 0.04 lots.

Ranges

• ATR multiplier 1.0 to 1.5: tight, for shorter-term trades
• ATR multiplier 1.5 to 2.5: standard, good balance of room and risk
• ATR multiplier 3.0+: very wide, for swing and position trades

Things to watch for

ATR values vary significantly between instruments. GBPJPY might have an ATR of 200 pips while EURCHF might be 30 pips. The multiplier should be adjusted per instrument, not set globally.

How to improve it

Backtest different ATR periods and multipliers on your instruments. The 14-period ATR with a 1.5x multiplier is a solid starting point for most forex pairs.

Kelly Criterion#

An optimal sizing formula from probability theory. It uses your win rate and average win/loss ratio to calculate the theoretically ideal position size for maximum long-term growth.

Kelly tells you the mathematically optimal amount to risk. Too little and you leave growth on the table. Too much and you risk ruin. It is the balance point between the two.

How it is calculated

Kelly % = Win Rate - ((1 - Win Rate) / Avg Win:Loss Ratio)

Example: 55% win rate, 1.5:1 avg W:L ratio. Kelly = 0.55 - (0.45 / 1.5) = 0.55 - 0.30 = 25%. Full Kelly says risk 25%.

The Trade Manager offers Full Kelly, Half Kelly, and Quarter Kelly options. Half Kelly is usually recommended because full Kelly is very aggressive and assumes your statistics are perfectly accurate.

Ranges

• Quarter Kelly: conservative, lower drawdowns, slower growth
• Half Kelly: recommended sweet spot for most traders
• Full Kelly: aggressive, maximum theoretical growth but high drawdowns

Things to watch for

Kelly Criterion assumes your win rate and average W:L are stable and accurately measured. In reality, trading statistics shift over time. If your stats are based on a small sample, full Kelly will oversize your trades. This is why half Kelly is safer. It gives roughly 75% of the growth with half the volatility.

How to improve it

You need a large sample size (200+ trades) for Kelly to be reliable. Update the inputs periodically as your statistics evolve. If your Kelly output is negative, it means your system does not have a positive edge and you should not be trading it.