Fixed Fractional vs Fixed Ratio Position Sizing: Which Is Better?

In the competitive landscape of 2026 trading, where automated algorithms and high-frequency volatility are the norm, your edge isn’t just in what you trade, it’s in how you scale. Position sizing is the engine of your trading business, and choosing between Fixed Fractional and Fixed Ratio sizing is often the difference between a smooth equity curve and a catastrophic “blow-up.”

Both methods aim to compound your account, but they do so with very different philosophies. One is a shield for capital preservation; the other is a sword for aggressive growth.

Fixed Fractional Sizing: The Defensive Anchor

Fixed Fractional is the gold standard for most retail and prop firm traders. The logic is simple: you risk a specific, fixed percentage of your total account equity on every single trade (usually 1% or 2%).

• How it works: If you have a $50,000 account and risk 2%, your risk is $1,000. If your account grows to $60,000, your risk increases to $1,200. If you hit a losing streak and drop to $40,000, your risk automatically shrinks to $800.
• The Benefit: It has an “anti-ruin” mechanism built-in. As you lose, your position sizes get smaller, making it mathematically difficult to hit zero. It is essentially a “safety belt” that tightens the faster you go downhill.

Fixed Ratio Sizing: The Aggressive Accelerator

Developed by Ryan Jones, Fixed Ratio sizing focuses on the relationship between your profits and your position size, rather than your total account balance. It uses a variable called a delta.

• How it works: You increase your position size only after you have earned a specific amount of profit (the delta). For example, if your delta is $5,000, you trade 1 lot. You only move to 2 lots once you’ve made $5,000 in profit. To move to 3 lots, you must make another $10,000 ($5,000 x 2).
• The Benefit: This method is more aggressive early on. It allows small accounts to “snowball” much faster than Fixed Fractional sizing. However, it doesn’t reduce your risk as quickly during a drawdown, which can be dangerous if a losing streak hits just after you’ve scaled up.

Which Is Better? The Verdict

Fixed Fractional is typically best for prop firms and large accounts because of its high risk sensitivity. It adjusts every trade, making it a low-complexity choice that focuses on capital protection. In 2026, with the prevalence of prop firms (like FTMO or TTT Markets), Fixed Fractional is almost mandatory. These firms have strict daily loss limits, and the dynamic nature of this sizing ensures that even after a bad day, your next trade’s risk is automatically adjusted to keep you away from the “Drawdown Cliff.”

On the other hand, Fixed Ratio is better suited for small accounts and traders with high win-rates. While it is more complex to calculate and doesn’t adjust until you hit specific milestones, it offers accelerated growth that can help you escape the “small account trap” faster. It rewards performance rather than just balance.

Conclusion – Fixed Fractional vs Fixed Ratio Position Sizing: Which Is Better?

There is no “perfect” method, only the one that fits your psychological profile. If you lose sleep over a 5% drawdown, Fixed Fractional is your best friend, it keeps your risk proportional and your survival chances high. If you are a seasoned trader looking to maximize a proven edge on a smaller capital base, Fixed Ratio offers a more powerful growth engine. The best traders often start with Fixed Ratio to build a “cushion” and then switch to Fixed Fractional to protect their legacy.

FAQ – Fixed Fractional vs Fixed Ratio Position Sizing: Which Is Better?

1. Can I combine both methods? 

Yes. This is known as “Hybrid Sizing.” Many traders use Fixed Ratio to scale up their lots until they reach a certain capital milestone (e.g., $100k), then switch to a conservative Fixed Fractional (1%) to protect that capital.

2. Is Fixed Ratio more dangerous? 

Generally, yes. Because your position size stays the same until you hit a profit milestone, a string of losses right after you increase your lots will hurt your account significantly more than it would under Fixed Fractional.

3. How do I choose my delta for Fixed Ratio? 

The delta is subjective, but it should be based on your maximum historical drawdown. A common rule of thumb is to set your delta to at least 2x your largest historical losing streak in dollars to ensure you have enough “padding” to survive a rough patch at a larger size.

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