Position Sizing

Position sizing answers the question every entry rule leaves open: how much? The most robust retail approach is fixed-fractional risk. Choose the percentage of equity you're willing to lose if the stop is hit, then work backwards to the quantity:

quantity = (equity × risk %) / |entry price − stop price|

With $10,000 of equity, 1% risk, an entry at $64,000 and a stop at $62,720 (2% below), the distance is $1,280 and the size is (10,000 × 0.01) / 1,280 ≈ 0.078 BTC, about $5,000 of notional.

Why per-trade risk beats fixed quantity

A fixed quantity risks more on trades with wide stops and less on tight ones, which is backwards from what you want. Fixed-fractional sizing makes every losing trade cost the same fraction of the account, and that is what keeps a losing streak survivable: ten straight 1% losses is a −9.6% drawdown, not a catastrophe.

AlphaProve strategies can set risk_pct on a signal to have the engine do this arithmetic per trade.

On AlphaProve

Beyond the per-signal risk_pct above, the engine offers six sizing modes: risk_per_trade (the fixed-fractional formula on this page), percent_equity, fixed_notional, fixed_contracts, leverage_notional, and leverage_risk. For risk that adapts to conditions, the volatility_target_risk and atr_risk helpers shrink the fraction as volatility rises, so a quiet market and a violent one don't put the same dollar amount at stake. Switching modes changes only the sizing line, leaving the entry and exit logic untouched.