Fixed percent
Definition
Fixed percent is a money-management method in which each trade's size is recalculated as a constant share of the current deposit, usually 1–2%. The method brakes trading in a drawdown and accelerates it during growth on its own: after every loss the next amount gets slightly smaller, so a losing streak burns the deposit ever more slowly.
How it works
Before each trade the size is computed afresh from the current balance. A $1,000 deposit at 2% risk means a $20 trade. A loss: the balance is $980, the next trade $19.60. Another loss: $960.40 and $19.21. A win at an 80% payout moves the balance back up — and the trade size grows with it.
The recalculation is the entire method. It automatically does what is hard to do by willpower: cuts exposure through a bad stretch and builds it up through a good one.
The built-in brake
A losing streak on a $1,000 deposit — fixed percent at 2% against a fixed amount of $20:
| Losses in a row | Percent 2% — remaining | Amount $20 — remaining |
|---|---|---|
| 10 | $817 | $800 |
| 20 | $668 | $600 |
| 30 | $545 | $400 |
Over a short streak the difference is barely visible, but the deeper the drawdown, the harder the percent brakes: by the thirtieth loss it has kept more than half the deposit, while the fixed amount kept 40%. The balance cannot hit zero: every loss takes 2% of the remainder, not of the starting thousand.
How it differs from a fixed amount
A fixed amount is never recalculated: the risk in money is always known in advance, but the method reacts neither to drawdown nor to growth. Fixed percent reacts to both: in losses the amounts shrink, in wins the profit stays in the deposit and enlarges the following trades — during growth the method naturally turns into compound interest. The price is that the trade size in money keeps changing, which makes series statistics slightly harder to track.
Frequently asked questions
What percent should I choose?
The professional standard is 1–2% of the current balance. Risking more than 2% per trade is no longer money management but gambling: ten straight losses at 5% take 40% of the deposit, and getting back to the start requires earning two thirds of what is left.
Do I need to recalculate after every trade?
Yes, from the current balance — the recalculation is the whole mechanism. If you compute the percent from the starting deposit once a week, the method degenerates into a fixed amount and loses both built-in properties: braking in drawdown and accelerating during growth.
Why can't the deposit reach zero?
Every loss takes a share of the remainder, not of the starting amount, so mathematically the balance only approaches zero. The practical limit is the platform's minimum trade size: once 2% of the remainder drops below it, there is nowhere left to shrink.