Risk budget:
Risk per contract:
Maximum contracts:
Educational estimate only. This does not account for slippage, gaps, commissions, or fees.
The position sizing formula
The formula has three steps. First, your risk budget: account size times the percentage you are willing to lose on one trade. Second, your risk per contract: stop distance in ticks times the tick value. Third, divide the first by the second and round down. Rounding down is not optional - rounding up means risking more than you decided to risk.
Worked example: a $50,000 account risking 1% has a $500 budget. Corn at $12.50 per tick with a 16-tick stop (4 cents) risks $200 per contract. Five hundred divided by two hundred is 2.5, so the answer is two contracts. If the stop gets hit, you lose about $400 plus costs, and the account lives to trade again.
Choosing a risk percentage
Smaller is better, especially early on. Many experienced traders risk somewhere between half a percent and two percent of the account per trade. At 1%, you can be wrong ten times in a row and still have most of your capital. At 10%, a normal losing streak ends the account. The percentage is a personal decision, but the math of drawdowns is not: losing half your account requires doubling what is left just to get even.
Futures trading involves substantial risk of loss and is not suitable for all investors. No sizing rule makes a losing approach profitable; it only controls how fast a losing approach loses.
Common position sizing mistakes
The most common error is sizing from margin instead of from risk. The exchange lets you control a corn contract for a modest deposit, so a small account buys ten, and one ordinary adverse move wipes out months of progress. Margin tells you what you are allowed to do, not what you should do.
The second error is ignoring slippage and gaps. Stops fill at the market when triggered, and in fast markets that can be several ticks beyond your price. Size for the stop being hit a little worse than planned. If you want to practice sizing before real money is involved, our two-week free trial includes simulated trading where you can test this discipline with live market prices.