How to calculate futures position size, step by step

Position sizing determines how many futures contracts you should trade based on your risk tolerance and stop-loss distance. This guide walks through the complete calculation process with real examples.

The Formula

Where ⌊ ⌋ means "floor" (round down to nearest whole number). You can't trade fractional contracts, and rounding up would exceed your risk limit.

Step-by-Step Process

Step 1: Determine Your Risk Budget

This is the maximum dollar amount you're willing to lose if your stop is hit. Calculate it as either:

• Fixed dollar amount: e.g., $500 per trade
• Percentage of account: e.g., 1% of $50,000 = $500

Step 2: Determine Your Stop Distance (in Points)

Measure the distance from your entry price to your stop-loss level. This must be in points, not ticks or dollars.

Step 3: Look Up Point Value

Every futures contract has a point value — the dollar amount you gain or lose per 1-point move. This is fixed by the exchange.

Find full specifications on the contract specifications page.

Step 4: Calculate Risk Per Contract

Multiply your stop distance (points) by the point value:

Step 5: Divide Risk Budget by Risk Per Contract

Step 6: Round Down

Always round down to the nearest whole contract. Rounding up would exceed your risk budget.

Complete Worked Example

Let's calculate position size for a Nasdaq (NQ) trade:

Common Mistakes

1. Confusing Ticks and Points

Always convert to points. If your stop is 40 ticks on ES (tick size 0.25), that's 40 × 0.25 = 10 points.

2. Forgetting to Round Down

If you calculate 2.7 contracts and trade 3, you're risking 11% more than planned. Always floor the result.

3. Using Tick Value Instead of Point Value

ES tick value is $12.50, but point value is $50. Make sure you use point value in the formula.

4. Not Accounting for Commissions

The basic formula ignores trading fees. If commissions are material ($5+ per contract round-trip), subtract them from your risk budget first.

Practice with Different Scenarios

Scenario A: Small Account, Micro Contract

• Account: $5,000
• Risk: 2% = $100
• Stop: 8 points
• Contract: MES (point value $5)

Risk per contract: 8 × $5 = $40
Contracts: $100 ÷ $40 = 2.5 → 2 contracts

Scenario B: Large Stop

• Account: $50,000
• Risk: 1% = $500
• Stop: 50 points
• Contract: ES (point value $50)

Risk per contract: 50 × $50 = $2,500
Contracts: $500 ÷ $2,500 = 0.2 → 0 contracts (can't trade)

Your stop is too wide for your risk budget. Either tighten the stop, increase risk %, or trade a smaller contract (MES).

Use the Calculator

Once you understand the formula, open the same NQ example in the position size calculator. The link uses a hash the calculator reads after the page loads, so the address stays free of calculator query parameters.

Disclosure: This site is maintained by a trader who develops Edge Trader Tools, a NinjaTrader add-on. The calculator is free and independent.