Enter your account size, risk percentage, and stop loss into the calculator to determine your position size.
Position Size Calculation Formula
The following formula is used to calculate the position size for futures trading.
Position Size = Account Risk / Stop Loss
Variables:
- Position Size is the amount to be traded (contracts)
- Account Risk is the amount of money you are willing to risk on a trade ($)
- Stop Loss is the amount of risk per contract ($)
To calculate the position size, divide the account risk by the stop loss. This ensures that your risk is managed according to your account size and the acceptable risk level per trade.
What is Position Size Calculation?
Position size calculation refers to the process of determining the amount of a security to trade based on the trader’s risk tolerance and account size. Proper position size calculation is critical for managing risk and ensuring that no single trade can have a devastating impact on the overall portfolio.
How to Calculate Position Size?
The following steps outline how to calculate the position size using the given formula.
- First, determine your account size and the percentage of the account you are willing to risk on a single trade.
- Next, determine the stop loss for the trade, which is the maximum amount you are willing to lose per contract.
- Use the formula: Position Size = Account Risk / Stop Loss.
- Finally, calculate the