Fixed size
The same volume on every trade. Simple and predictable, but the risk floats: with wide candles a stop at the same distance is hit more often, and with narrow ones the target is not reached.
Suitable when you trade a single instrument with stable volatility.
Volatility-based (ATR)
Size is computed so that the monetary risk stays the same: wide candles mean a smaller position, narrow ones a larger one. The distance to the stop is set in units of ATR, and the position is fitted to it.
This is the only way to compare trades across instruments: one trade on gold and one on EURUSD at a fixed size are incomparable risks.
What to choose
- One instrument, a calm market — fixed.
- Several instruments or noticeably changing volatility — ATR.
What neither method does
Neither protects against too much total risk. Ten trades at 1 % is 10 %, and the limit on concurrent positions matters more here than the sizing formula.