Position sizing

Position sizing is the decision of how many contracts to trade on a given entry, derived from the amount the trader is willing to lose if the stop is hit, the distance to that stop in ticks and the instrument's tick value, and constrained by the account's daily loss and drawdown rules.

Senzoukria · Glossary · Updated September 2026

The arithmetic

Start from the risk budget for the trade, the cash amount lost if the stop is hit. Divide it by the stop distance in ticks multiplied by the tick value of the contract. The result, rounded down, is the number of contracts. Because futures trade in whole contracts, a small account on a full-size contract often rounds down to zero, which is one reason micro contracts exist.

The same trade expressed in R makes sizes comparable: one R is the cash risked at entry, and every outcome is measured as a multiple of it. A $40 gain on a trade that risked $8 and a $40 gain on a trade that risked $40 are both $40 in dollars, and 5R versus 1R in risk units.

Constraints that override the formula

  • Daily loss limit: the size that fits one trade may leave the day unable to absorb a second loss. Sizing is a per-day question as well as a per-trade one.
  • Maximum drawdown, trailing or fixed: a larger position reaches a loss threshold sooner, and both gross outcomes and per-contract costs grow with size.
  • Maximum position: prop-firm rules and the trader's own settings cap contracts regardless of the formula.
  • Volatility: the same tick distance is a different fraction of a session's range on a quiet day and on a news day. Realized volatility and the session risk budget give context for the stop distance.

Sizing and the stop are one decision

A stop placed where the market invalidates the idea determines the size; choosing the size first and then fitting a stop to it inverts the logic and produces stops that are too tight to survive normal noise. Where the invalidation sits is a chart question, informed by traded levels, the profile and where volume printed; how many contracts that allows is arithmetic.

In Senzoukria

The order ticket applies guards set in Settings: a maximum order size in contracts per order, a confirmation before sending and a daily loss limit; Flatten closes everything from any screen and no order leaves without a click. The Autopilot panel has its own Max contracts and Max daily loss fields, applied to an armed strategy. The Prop firm simulation in the backtest panel models rules named Max drawdown, Daily loss limit and Position size, and explains when it cannot settle a rule, for example a drawdown that follows open profit when trades carry no excursion data. The Journal records each trade's quantity with its context, and the backtest R summary reports what share of trades had a stop, since trades without a stop have no R.

Common mistakes

  • Sizing from the target instead of the stop.
  • Using the same number of contracts on every trade regardless of stop distance, so that risk per trade varies silently.
  • Ignoring that per-contract fees scale with size while the account's loss limit does not.
  • Adding contracts after a few winners without re-checking the daily limit and the drawdown floor.

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Frequently asked questions

How do I convert a risk amount into contracts?
Divide the cash you accept to lose on the trade by the product of the stop distance in ticks and the tick value of the contract, then round down to a whole number. If the result is zero, the stop is too wide for that contract at that risk budget; a micro contract or a different setup is the honest answer, not a tighter stop.
Should position size change with volatility?
If the stop is set in price terms from the chart, a more volatile session usually calls for a wider stop and therefore fewer contracts for the same risk. If the stop is a fixed tick count, higher volatility makes it more likely to be hit by noise. Either way the risk amount, not the contract count, is what should stay stable.
Do the desktop's size limits replace a prop firm's rules?
No. Application limits such as Max contracts and the daily loss limit are guards on the trader's side. The firm's own rules on drawdown, consistency and position size apply independently, and the prop firm simulation in the backtest panel states which of them it can and cannot settle from the trades it has.

Keep reading

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