The Position Sizing Consistency Rule ensures traders maintain a steady risk level for each trade idea. Under this rule, the maximum risk (including any floating losses) per trade idea is limited to 2% of the initial account balance.
A trade idea includes:
– Multiple positions opened on the same instrument, in the same direction, at overlapping times.
– Trades on the same symbol and direction that are opened and closed within 2 minutes of each other.
This rule helps prevent large equity swings that could arise from over-leveraging or sudden increases in position size on a single trade. For example, if a trader opens multiple BUY positions on EURUSD at the same time, the total risk across all these positions should not exceed 2% of the initial account balance.
Traders can use up to the full daily drawdown limit, but it should be spread across different trade ideas rather than concentrated on one. This approach supports sustainable, disciplined trading and minimizes the risk of significant account losses.