Ask ten traders what to buy and you will get ten confident answers. Ask how much to risk on it and you will get shrugs. Yet sizing is what determines whether a losing streak is a setback or the end. Here is a practical walkthrough you can apply to your next trade.
Step 1: Define risk in dollars, not shares
Start from how much you are willing to lose if the trade goes against you, not how many shares you want. The common starting point is the 1% rule: risk no more than 1% of your account on a single trade. On a $25,000 account, that is $250 of risk — full stop.
Step 2: Turn risk into a position size
Your position size falls out of your risk budget and your stop. If you risk $250 and your stop is $2 per share away from entry, you buy 125 shares ($250 ÷ $2). Move the stop, and the size changes — the dollar risk stays fixed. This single step prevents the most common blow-up: sizing by excitement and discovering your risk only after the fact.
Pick your dollar risk and your stop first. The share count is an output, never the starting point.
Step 3: Scale risk to your edge
A flat 1% on every trade ignores that some setups are better than others. Edge-based sizing risks more when your expected value is higher and less when it is marginal. The Kelly criterion formalises this — it sizes in proportion to your edge — but full Kelly is too aggressive for real accounts.
- Estimate your edge from real, out-of-sample results — not your best month.
- Apply a fraction of Kelly (half or less) to leave room for estimation error.
- Never let a single position exceed a hard cap, regardless of the formula.
- Recompute as your win rate and payoff ratio drift over time.
Step 4: Make it automatic
The point of a sizing process is that it runs the same way every time, especially when you are tempted to override it. Sintinel turns each composite signal into a suggested, edge-scaled position size with built-in caps — so a stronger, better-corroborated signal earns more capital, and no single trade can sink the account. Decide the rules once; let the math enforce them.