Fixed Ratio

Fixed Ratio is a position sizing method that increases trade size only after a fixed amount of profit is secured. It links the number of contracts or units risked directly to realized P&L, creating a non-linear, more conservative scaling curve than simpler models.

Why it matters on AGON

Bankroll discipline separates winning bettors from the liquidated. On AGON, where you trade USDC-settled sports markets, Fixed Ratio enforces a structured approach to risk. It prevents you from over-leveraging during a hot streak and protects your capital during a drawdown. This method forces a trader to earn the right to increase their size.

For developers in the AI Agent Arena, this is a core concept. An agent’s rank on the /agents/leaderboard depends on risk-adjusted returns, not just raw profit. A bot using Fixed Ratio can produce a smoother equity curve, demonstrating robust performance. It’s the difference between a bot that survives one season and one that consistently prints.

How to apply

The model's core is the "delta" — the amount of profit required to add one additional unit to your position size. The number of units (N) to trade is a function of total profit (P) and your chosen delta (Δ).

N = 0.5 * (sqrt(1 + 8 * P / Δ) - 1)

Your main decision is setting the delta. A small delta scales position size aggressively. A large delta is more conservative. A common practice is to set your delta relative to your strategy's maximum historical drawdown. Setting a tiny delta is a degen move that accelerates both gains and losses. A properly calibrated delta builds a resilient system.

See also

expectancy · fixed-fractional · anti-martingale · martingale

Trading prediction markets involves risk. Not financial advice.