RISK MECHANICS
Contracts equal your dollar risk divided by the per-contract risk, where per-contract risk is your stop distance in ticks multiplied by the contract's tick value. Everything else in position sizing is a decision about the first number. The arithmetic itself has one right answer, and rounding up is how accounts die.
By the Finotaur Team · Last updated: 27 July 2026
THE FORMULA
There is exactly one formula. Contracts = dollar risk / (stop distance in ticks x tick value). The only genuinely discretionary input is the dollar risk you are willing to lose on the trade. Once that is fixed, the contract count follows and there is nothing left to decide.
Traders get this wrong in a specific way: they choose the contract count first, because it feels right or because it is what they traded last time, and then discover what they risked afterwards. That inverts the calculation and makes risk an output rather than an input.
Always round down. A formula that returns 2.7 contracts means two, not three. Rounding up on every trade compounds into consistently exceeding your intended risk, which is the difference between a strategy that survives a losing streak and one that does not.
If the formula returns less than one contract, the correct answer is not to take the trade at one contract anyway. It is either a tighter stop, a smaller-denomination contract such as a micro, or no trade. Taking it anyway means knowingly risking more than you decided to.
TICK VALUES
Per-contract risk depends on the tick value, which is fixed per contract by the exchange. These are the CME's published values for the most commonly traded futures. They are the same for everyone and do not vary by broker or prop firm.
The micro contracts matter more than they get credit for. A micro is a tenth of the E-mini for the equity indices, which means a trader whose formula returns a fraction of an E-mini contract can often express the same trade properly in micros rather than oversizing or skipping it.
| Contract | Symbol | Tick size | Tick value | Per point |
|---|---|---|---|---|
| E-mini S&P 500 | ES | 0.25 | $12.50 | $50 |
| Micro E-mini S&P 500 | MES | 0.25 | $1.25 | $5 |
| E-mini Nasdaq 100 | NQ | 0.25 | $5.00 | $20 |
| Micro E-mini Nasdaq 100 | MNQ | 0.25 | $0.50 | $2 |
| E-mini Russell 2000 | RTY | 0.10 | $5.00 | $50 |
| Crude Oil | CL | 0.01 | $10.00 | $1,000 |
| Micro Crude Oil | MCL | 0.01 | $1.00 | $100 |
| Gold | GC | 0.10 | $10.00 | $100 |
| Micro Gold | MGC | 0.10 | $1.00 | $10 |
WORKED EXAMPLE
Take a hypothetical account where the trader has decided a single loss may cost $200, trading ES with an 8-point stop. Eight points is 32 ticks. At $12.50 per tick that is $400 of risk per contract. $200 divided by $400 is 0.5 contracts, so ES cannot express this trade at the intended risk.
The same trade in MES: 32 ticks at $1.25 is $40 per contract. $200 divided by $40 is 5 contracts. The trader takes 5 MES and risks exactly $200, rather than taking 1 ES and risking double what they decided.
This is the practical case for micros that gets missed. They are not a beginner's contract. They are the instrument that lets the arithmetic resolve cleanly at small risk budgets, which is most prop accounts.
Place the stop where the trade idea is invalidated, then let the formula decide the size. Moving the stop closer to fit a larger position is not risk management, it is a different and worse trade.
Round-turn commissions and the occasional slipped fill mean the realised loss is slightly larger than the calculated one. Sizing to the exact limit leaves no allowance for that.
The dollar risk input should be derived from the distance to your drawdown limit, not from the account's face value. That is a separate calculation and it changes as your peak moves.
WHAT GOES WRONG
Reviewing a real trade log usually surfaces the same three patterns. None of them is about strategy selection.
The first is inconsistent size with no stated reason: a log where position size varies trade to trade in a way the trader cannot explain afterwards. Size that moves with conviction rather than with the arithmetic makes performance impossible to attribute, because a strategy's results and the sizing decisions are mixed together in the same number.
The second is size that increases after losses. This is the most expensive one and it is rarely deliberate. It shows up clearly in a journal that records size alongside the outcome of the preceding trade.
The third is a stop that is set from the desired size rather than the chart. It produces a log full of small losses that were stopped out early and would have worked, which reads like bad entries but is actually a sizing problem.
All three are invisible in a P&L curve and obvious in a trade log that records intended risk, actual risk and position size per trade. That is the specific reason to record intended risk at entry rather than reconstructing it afterwards.
STEP BY STEP
Fix the maximum you are willing to lose if the stop is hit. On a prop account, derive it from remaining room to the drawdown limit rather than the account balance.
Place the stop at the price that invalidates the trade. Do not move it to accommodate a position size you already have in mind.
Divide the stop distance in points by the contract's tick size. For ES and NQ the tick size is 0.25, so a point is four ticks.
Ticks times tick value gives the dollar risk of a single contract on this trade. This is the per-contract risk.
Dollar risk divided by per-contract risk gives the contract count. Always round down. If the result is under one, use a micro contract or skip the trade.
Log the intended dollar risk and the resulting size at entry. Reconstructing it later from fills is guesswork, and it is exactly the field that makes sizing mistakes visible in review.
FAQ
Divide your intended dollar risk by the per-contract risk of the trade. Per-contract risk is the stop distance in ticks multiplied by the contract's tick value. For example, $200 of risk on an ES trade with a 32-tick stop is $200 divided by (32 x $12.50), which is 0.5 contracts, so ES cannot express that trade at that risk level.
The E-mini S&P 500 has a tick size of 0.25 and a tick value of $12.50, which makes a full point worth $50 per contract. The Micro E-mini, MES, is one tenth of that: $1.25 per tick and $5 per point.
The account size is the wrong input. What matters is the distance between your current equity and the level that ends the account, which on a trailing drawdown is usually a small fraction of the face value. Derive your dollar risk from that remaining room, then run the sizing formula against it.
Micros are one tenth the size of the corresponding E-mini, so they let the sizing arithmetic resolve at smaller risk budgets. If your formula returns a fraction of an E-mini contract, the same trade usually expresses cleanly in micros at exactly the risk you intended, instead of forcing you to double it or skip the trade.
Down, always. Rounding up means every trade carries slightly more risk than you decided, and the effect compounds across a losing streak. A formula returning 2.7 contracts means two.
They do not change the formula, but they do mean the realised loss on a stopped-out trade is larger than the calculated risk. Round-turn commissions and occasional slippage should be treated as part of the loss rather than ignored, which is another reason not to size to the exact limit of what you can afford.