Calculation Methodology

Position Size Formula

The calculator uses the standard risk-based position sizing formula used by professional futures traders:

Where:

• Risk Budget = Your maximum acceptable loss (fixed $ or % of account)
• Stop Distance = Distance from entry to stop-loss (in points or ticks)
• Point Value = Dollar value of one point of movement
• Commissions = Round-trip trading fees per contract (when included)
• ⌊ ⌋ = Floor function (round down to nearest whole contract)

This formula ensures you never risk more than your specified amount, even if your stop is hit immediately.

Why We Always Round Down

The calculator always rounds down to the nearest whole contract, never up. This is intentional:

• Futures contracts cannot be traded fractionally — you can only buy or sell whole contracts
• Rounding up would exceed your risk budget (e.g., if you can afford 2.3 contracts but trade 3, you're risking 30% more than planned)
• Rounding down ensures you stay within your risk limit in all scenarios
• Professional traders prioritize capital preservation over maximizing position size

Tick Value vs. Point Value

Futures contracts are quoted in points but trade in ticks. Understanding the difference is critical:

Example (ES): Tick Value = $12.50, Tick Size = 0.25
Point Value = $12.50 ÷ 0.25 = $50 per point

Example (BTC): Tick Value = $5, Tick Size = 5
Point Value = $5 × 5 = $25 per point

Commission and Fee Handling

When you enable "Include Fees/Commissions" in the calculator:

• The calculator subtracts the round-trip commission cost from your available risk budget per contract
• This means you'll trade fewer contracts, but your true risk (including fees) stays within your limit
• Example: $50 stop × $50/point = $250 risk. With $5 commission, actual risk per contract = $255. Your position size will be smaller to keep total risk at your target.
• Always use round-trip (entry + exit) commission amounts, not one-way fees

Data Sources

All contract specifications (tick values, tick sizes, point values) are sourced from official exchange documentation:

• CME Group: ES, NQ, YM, RTY, and all CME-listed contracts — CME Markets
• ICE Futures: Soft commodities and select indices — ICE Products
• Eurex: European equity indices and bonds — Eurex Markets

We verify specifications against exchange rulebooks and product fact sheets. Each contract specification page includes a verification stamp for the listing exchange.

Contract Specification Updates

We monitor exchange announcements for contract specification changes and update our data accordingly. Recent updates:

If you notice an outdated specification, please contact us through the contact page.

Limitations and Disclaimer

This calculator is an educational tool for position sizing. It does not account for:

• Slippage (difference between expected and actual fill prices)
• Intraday margin requirements (which may differ from overnight margins)
• Exchange fees beyond standard brokerage commissions
• Currency conversion for non-USD denominated contracts
• Tax implications or regulatory leverage limits

Always verify calculations independently and consult your broker's margin requirements before trading.