Position sizing starts with a risk amount set in advance, then estimates quantity from the price risk for one contract. The result is an educational estimate, not a cap on actual losses.
Key concepts
- Tick
- The smallest permitted price increment for a contract.
- Tick value
- The monetary change for one contract when its price moves by one Tick.
- Risk per contract
- An estimate found by multiplying stop distance in Ticks by the contract's Tick value.
Learn it step by step
- 1Enter account size and planned risk percentage to calculate Max Risk.
- 2Enter stop distance and instrument to see the estimated dollar risk per contract.
- 3Divide Max Risk by the per-contract estimate, round down to a whole contract, and review the resulting planned risk.
Slippage, gaps, volatility, and execution can change the actual result. The estimate does not guarantee a maximum loss.