Start With the Loss, Not the Entry
Most beginners size positions by asking how many contracts they can afford. Professionals ask how much they are willing to lose. Pick a fixed fraction of account equity as your maximum loss per trade — one percent is conservative, two percent is aggressive for a beginner — and treat it as law.
On a $20,000 account at one percent, every trade risks $200. That number, not your conviction about the trade, drives everything downstream.
From Risk Dollars to Contract Count
Measure the distance from your planned entry to your stop in the market's own units, then convert to dollars with the contract's point value. Corn at $50 per cent per contract: entry 450, stop 442, risk 8 cents, or $400 per contract. Your $200 risk budget divided by $400 per contract means you cannot take even one full contract at that stop width — the honest answers are a wider account, a tighter technically valid stop, a micro contract, or no trade.
- Contracts = risk budget ÷ per-contract risk. Always round down.
- Per-contract risk = stop distance × point value. Get point value from the contract specification.
- Never average the stop wider after entry to justify more size.
Micro contracts change the arithmetic meaningfully for small accounts. A micro corn contract is one-tenth the size, so that same 8-cent stop risks $40 instead of $400 — suddenly a $4,000 account can trade the idea at one percent risk. The method never changes; the instrument choice is what bends to fit your account, and never the other way around.
Portfolio-Level Rules
Per-trade risk is only half the picture. Cap total open risk across all positions — many traders hold the sum under five or six percent — and treat correlated markets as one position: long corn and long wheat is roughly one big grain bet. Recalculate sizes as equity changes; fixed-percent sizing automatically trades smaller after losses, which is exactly the right direction.
Futures trading involves substantial risk of loss and is not suitable for all investors. No sizing rule makes a losing approach profitable; sizing only ensures you survive long enough to find out whether you have one.