Position sizing is the least exciting part of trading and the part that decides whether one bad week ends your career. The goal isn't to maximise profit on any single trade. It's to make sure no losing streak can knock you out.
The 1% rule (and why many traders use less)
A common guideline is to risk no more than 1% of your account on any one trade. Many active day traders and prop traders use 0.25% to 0.5%, because they take several trades a day and losing streaks are normal.
| Risk per trade | 10 losses in a row | 20 losses in a row |
|---|---|---|
| 0.25% | −2.5% | −4.9% |
| 0.5% | −4.9% | −9.5% |
| 1% | −9.6% | −18.2% |
| 2% | −18.3% | −33.2% |
Ten losses in a row sounds unlikely, but for a strategy that wins 40% of the time it happens surprisingly often over a year.
How to calculate position size
Contracts = (Account × Risk %) ÷ (Stop distance × Value per point)
Example: Micro Gold (MGC)
MGC moves $10 for every $1 move in gold (a 0.10 tick is $1).
- Account: $50,000, risk 0.5% → $250 per trade
- Stop: 5.0 points away → $50 risk per contract
Contracts = $250 ÷ $50 = 5 MGC.
Example: Micro Nasdaq (MNQ)
MNQ is $2 per index point (a 0.25 tick is $0.50).
- Risk: $250
- Stop: 25 points → $50 per contract
Contracts = $250 ÷ $50 = 5 MNQ.
Track drawdown and R on every trade
VOLERON shows your result in R, your equity curve and your drawdown, so you always know how much room you have.
Try VOLERON free for 7 daysSizing on a prop firm account
On a funded account, size from the firm's limits, not the account's headline size. If the account is "$150K" but the drawdown you're allowed is a few thousand dollars, that drawdown is your real account. Risk a small fraction of the drawdown per trade, not 1% of $150,000. See how to pass a prop firm evaluation.
Common sizing mistakes
- Same contracts, different stops. If your stop is twice as wide, your size should be half as big.
- Sizing up after a loss to win it back. That's revenge trading with extra steps.
- Sizing up after a hot streak. Increase size based on account growth, not mood.
Check your sizing in your journal
Track your result in R as well as dollars. If your losses are consistently −1R, your sizing and stops are working. If you see −2R or −3R losses, your size or your stop discipline needs attention.