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Futures 101 · Lesson 5 of 6

Risk Per Trade With Micro Contracts

The fastest way to blow up an account is to pick your size by feel. Pick it with math, using your stop. Here is how.

The 1 percent rule

Risk no more than 1 percent of your account on one trade. Many new traders start at half of that. Small risk lets you survive a losing streak, and every trader has them.

The sizing formula

Contracts = your dollar risk / (your stop distance in points x the dollar value of one point).

The sizing formulaDollar risk$50Stop x $ per point10 x $2 = $20÷= 2.5, round down: 2 MNQ
Always round down. Never round up to get a bigger position.

A worked example

  • Account: $5,000. One percent is $50. That is your dollar risk.
  • Your plan puts the stop 10 points from your entry.
  • On MNQ, 10 points x $2 = $20 of risk per contract. $50 / $20 = 2.5. Round down: 2 contracts.
  • On NQ, 10 points x $20 = $200 per contract. $50 / $200 = 0.25. Round down: 0 contracts. This trade is too big for this account on NQ.

A wider stop means a smaller size

If the next setup needs a 25-point stop, the same $50 risk on MNQ is 25 x $2 = $50 per contract. That is 1 contract. Your dollar risk stays the same. Your size changes.

Set a daily limit too

Pick a daily stop before the session starts. For example: three losing trades, or 2 percent of the account, and you are done for the day. Write it down. Honor it.

Want the math done for you? Use our free Position Size Calculator. CME explains the smaller contracts on its Micro products page.

Previous: Lesson 4Sessions, holidays and the roll

All Futures 101 lessons

  1. Lesson 1: Points, ticks and dollar value
  2. Lesson 2: Margin, leverage and daily settlement
  3. Lesson 3: Order types and bracket orders
  4. Lesson 4: Sessions, holidays and the roll
  5. Lesson 5: Risk per trade with micros (you are here)
  6. Lesson 6: Your first plan: chart, simulator, journal

Mahalo for reading and trade well!
Glenn & Reid | Hawaiʻi Trading Academy

Risk disclaimer: Trading futures involves substantial risk of loss and is not suitable for every investor. You can lose more than your initial deposit. Examples on this page use made-up numbers to teach the math. Past performance does not guarantee future results. Hawaiʻi Trading Academy provides education only. We are not financial advisors, and nothing on this page is a recommendation to buy or sell any financial product. CME Group is an independent exchange; HTA is not affiliated with it. Contract details can change; check CME before you trade.