Variable risk % versus fixed risk %

One of the things I've noticed on various signal provider pages and on various forum posts is that people seem to always trade at a perfectly round lot size number, e.g. "I just bought 2 lots" or "I just bought 2.5 lots".

Very rarely will I see, e.g. 1.71 lots. When I see a number like that I associate that with a truly exponential money management system. But when I see a perfectly round number, I associate it with a degree of linearity.

While I was learning MQL4, I saw posts where people wanted to link lot size to their account balance, but not in the same way I would. They would want, for example:

$1000-$1999 balance = 0.1 lots
$2000-$2999 balance = 0.2 lots
etc.

Which makes no sense to me. Let's say the stop loss is 20 pips, then if you have a $1k balance and an order of 0.1 lots, then the risk would = 2%, which is fine. But if your balance is $1500, then using a 0.1 lot size and a 20 pip SL means the risk would equal 1.33%. If your balance is $1999, then your risk is 1.0005%. This is what I mean with the title, do people vary their risk % like this? It's only once you reach $2000, that you upgrade to 0.2 lots and return to 2% risk.

The following makes much more sense to me:

Balance / 10,000 = lot size

So if you have $1500, then the lot size is 0.15 and with a SL of 20 pips, then it equals 2%. If you have $1200, lot size is 0.12, which is still 2%, etc. It is always 2%.

Why do people use perfectly round lot sizes?

Because people are lazy and that round numbers are easy..
Your reasonming is perfectly correct.

In your example, the trader is rounding down to the nearest 0.1 lot every single time, which is similar to what I would do personally.

I also agree with your reasoning, and your query is valid.

But why do I round down? Speaking only for myself, it's due to my own peculiar sense of conservative position-sizing. No logic to it... just something that makes me feel that I'm being "sensible".

I like to use this indicator to help me enter a position size, saves a lot of time and effort especially if you need to enter a position quick and need to know how many lots to risk based on your accoutn balance.

I was hoping that there was some mega super money management system that I was missing out on that wasn't essentially gambling with a large lot size.

But I guess I see it all around me, person A decides to buy exactly £5000 of company X on the stock market. When queried as to why he bought exactly £5000, I get a reply along the lines of, "I read about it and it seemed a good choice." Which of course completely missed the point about money management. I guess some people have trouble thinking in terms of the "language" of mathematics.

skenobi, in my opinion you are gimping your trading strategy. For argument's sake, let's assume 100% win rate and 1:1 RR for calculations. To get from $1000 to $2000 you would need 50 trades using 0.1 lots each time. If you kept up the 2% rule, you would need 35 trades.

I do the same thing with you. My indi even calculate for me so I only need to enter the number.

1. I ain't saying you're wrong.

2. But I prefer to think of it this way: the "loose capacity" I end up with when I don't utilize to the max of the x% rule gives me the leeway to be flexible with SL (or no SL) settings, among other things. I might even OVER-utilize my lot allowance if I think a particular set-up had a much higher-than-normal success probability.

3. You could disagree with my reasoning above, but it works for me! And I ain't in any hurry to get to my target!