what is fixed fraction ?
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Step-by-step explanation:
N is the number of contracts or shares of stock you should trade, f is the fixed fraction of your account that you have decided to trade, equity is the value of your total account, and trade risk is the amount of money you could lose on the transaction. ...
Because trade risk is a negative number, you need to convert it to a positive number (absolute value) to make the equation work.
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Answer:
Fixed fractional trading assumes that you want to limit each trade to a set portion of your total account, often between 2 and 10 percent. Within that range, you'd trade a larger percentage of money in less risky trades and at the smaller end of the scale for more risky trades.
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