Position Size Problem (Fixe Fractional, risk on each trade)

[PubPeer Academy]

Dear Mike

I was testing your software and I am impressed by the way you put in many efforts for this product. I realized that there is a big issue in one of your position size methods (Fixed Fractional, risk on each trade), I hope you fix this by implementing a one line code for checking this additional condition;

I was checking the list of trades for this position sizing method. For stock, or Crypto like BTC the size of the position * by the entry price should be less than the Equity. This method requires an additional line for checking this, otherwise, it is useless.  If you use 1 % for this method, you can see that the max loss could be higher than this like 6 %, and when you multiply the size number by the entry price, the required equity is higher even 2 times the current equity. so in fact the position will not be opened and it will be rejected since the size is wrong. 

I am attaching a list of trade for BTC and the BTC price data, you can check the highlighted values, 1 contact=0.001* BTC for this file. 

Best Regards,

Arash

[MikeBryant]

As long as you apply the fixed fractional method as designed, it works correctly. I can't tell from your attached files what you're trying to do; I would need to see the strategy code. In general, though, BTC has a point value of 1, and the trade risk is determined by either the protective stop or, if you don't use a protective stop, the maximum historical loss. By definition, fixed fractional position sizing calculates the position size as the fixed fraction multiplied by the account value divided by the trade risk. You can read more about this and how it works in the user's guide. 

Mike Bryant, Adaptrade Software

[Alan Bober]

Not sure if this is relevant,  but the BPV for @BTC as shown in  Tradestation is 5. Min move, however,  is also 5.

Sent via the Samsung Galaxy S25+, an AT&T 5G smartphone
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From: adaptrad...@googlegroups.com <adaptrad...@googlegroups.com> on behalf of MikeBryant <m...@breakoutfutures.com>
Sent: Monday, July 14, 2025 12:40:49 PM
To: Adaptrade Builder <adaptrad...@googlegroups.com>
Subject: Re: Position Size Problem (Fixe Fractional, risk on each trade)

 

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[PubPeer Academy]

Dear Mike, Thanks for your reply. I know how that method works, the fact that the size is not checked later is the problem as a real application of the method in live trading. See these two blew trades in the files there are many cases like these: For 1 % fixed fractional, it gives: Trade    Symbol          Entry Date          Signal Price    Entry Price     Entry Signal      Exit Date               Signal Price     Exit Price          Exit Signal     Stop Price      Direction     Quantity       Profit/Loss      Costs     Net Profit/Loss         Risk           Equity      %risk trade 316      BTCUSDT 11/8/2021 2:00      65478.90997 65478.90997   Price Stop     11/9/2021 5:00      66719.46997    68563.99        Price Target    61050.37997    Long               102          314.6782    6.678849      307.9993      1.911462     19933.57      1.569377603 317      BTCUSDT 11/15/2021 1:00    65963.61997 65963.61997   Price Stop   11/15/2021 17:00   63959.46997    63959.46997  Price Stop     63959.46997      Long               582        -1166.415   38.39083     -1204.806     0.3421968    18728.77      -6.044105496 For Trade 317:  Quantity * Entry Price = 582* 0.001BTC* 65963.62 = 38,390 $ > current equity= 19,933.57, the order with the size 582 is/will be rejected.                            Net Profit= 582* 0.001BTC*( 63959.46997- 65963.61997)= -1166.415 $,  correct profit as above. Theses orders will not be live traded and the backtest is misleading. Probably it is only working for future margin trading, but surely not for stock or crypto spot trading because the condition is always: Size*entry price <=Equity  Best Regards, Arash

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[MikeBryant]

The position sizing methods in Builder are not intended to be definitive. If you need additional position sizing options, I have an entire software program, Market System Analyzer (MSA), for that purpose. The position sizing methods in Builder are primarily to allow the user to take position sizing into account during the build process for users who wish to include the effect of position sizing on the strategy logic chosen during the build process. In that regard, it shouldn't matter much whether the position sizing exceeds your leverage limits since it's about the effect it has on the logic chosen by the program. I personally recommend using a fixed size when building strategies so as not to confuse strategy logic with money management methods, which can always be added after the strategy is built. 

Also, if your account does not permit leverage and you don't want to exceed 1:1 leverage, you should be able to take that into account in setting the fixed fraction.