Position sizing formulas that survive a losing streak

Most blowups happen because people treat position sizing as an afterthought. If you risk a fixed dollar amount regardless of your account size, a bad streak will wipe you out. The only way to survive is to use fixed-fractional sizing, where you risk a small percentage of your equity on every single trade.

Start by deciding your risk per trade, say 1%. If your account is $10,000, your max loss is $100. To find your position size, divide that $100 by the distance to your stop-loss. If you buy at $50 and your stop is at $48, your risk is $2 per share. Dividing $100 by $2 gives you 50 shares. This math scales automatically. If your account drops to $9,000, your 1% risk shrinks to $90, forcing you to trade fewer shares and slowing down the bleed.

Here is how that looks over a hypothetical losing streak:

Notice how the dollar amount lost per trade gets smaller as the account shrinks. This is the exact opposite of the gambler's fallacy where people increase stakes to chase losses. By keeping the percentage constant, you mathematically make it harder to hit zero, though you still need an edge to recover. You can check out QuantConnect to backtest how different risk parameters affect your drawdown curves.

Fixed-fractional sizing isn't a holy grail, but it buys you time. Does anyone here actually stick to 1% or less, or do you find that too restrictive for smaller accounts?