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SmartMA/STRATEGIES/ATR_PositionSizing.md

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ATR-Based Dynamic Position Sizing (with SmartMA MT5)

Concept:
Size every trade according to current market volatility—using SmartATR—so you risk the same amount per trade, no matter how choppy or quiet the market.

Setup

  • Timeframe: Any (works for swing and daytrading)
  • Asset: Any
  • Indicator: SmartMA MT5 (using risk band/ATR output)

How to Calculate Position Size

  1. Calculate ATR:

    • Use SmartMA’s risk band (ATR value on current bar)

  2. Define Risk per Trade:

    • E.g., risk 1% of account balance per trade

  3. Compute Position Size:

    • Position Size = (Account Risk per Trade) / (ATR-based stop distance)
    • Example: ATR = 30 pips, willing to risk $100 → $100 / 30 = $3.33 per pip

  4. Adjust Trade:

    • Set stop loss at (Entry ± SmartATR)
    • Trade only if minimum lot size is possible and within broker/margin limits

Example Pseudocode

AccountRisk = 1% of balance StopDistance = SmartATR (on entry bar) PositionSize = AccountRisk / StopDistance

Why This Works

  • Makes your risk consistent, regardless of market conditions
  • Automatically trades smaller in volatile times, larger in calm times
  • No more “random” stop distances

Tip:
Combine with SmartMA’s session/news overlays—avoid position sizing on news or “frozen” bars!

SmartMA MT5 – For risk managers and traders who want true consistency!