Position sizing converts a money budget into a permitted quantity. The denominator must be loss distance in money per unit, not simply a price distance with the contract multiplier omitted.

Work Through the Units

Use quantity = available loss budget / planned loss per unit, rounded down to a permitted increment. Include costs and an adverse-execution allowance in the denominator where they scale with quantity; account for fixed charges separately.

For an illustrative share entry at $75 and stop trigger at $73, price distance is $2 per share. A $500 budget divided by $2 gives 250 shares before costs. With an illustrative $0.10 per-share allowance, the result is 238 whole shares, since 250 would exceed the expanded budget.

For a contract worth $50 per point, a ten-point distance is $500 per contract. A $500 budget leaves no room for additional costs or an adverse exit at one contract. The correct result may be zero contracts.

Compare Planned and Actual Loss

A stop may execute beyond its trigger. Sizing to a stop is therefore a model of loss, not a guarantee that a catastrophic loss is impossible. Read stop-order limitations.

If you recalculate a risk percentage after each loss, dollar sizes decline with account value. Keeping a fixed starting-dollar amount is a different rule. Do not mix those models when calculating a losing streak.

Wider Stops Mean Less Quantity for the Same Budget

At a $500 budget before costs, a $7.50 distance permits 66 whole shares with $495 price risk; a $1.50 distance permits 333 with $499.50. Rounding means neither is exactly $500. An ATR multiple is one possible distance rule, not a requirement imposed by volatility.

Check Shared Limits Before Submitting

Deduct exposure already committed to positions and working entries. Confirm margin, maximum quantity and any account-specific loss threshold. An evaluation's nominal account balance may be simulated and far larger than its remaining permitted drawdown.

There is no universal 1–2% risk requirement or 0.5–1% prop-account rule. Use your actual constraints, and verify any calculator's units, currency conversion and rounding with a worked example before relying on it.

Risk Disclaimer: Trading involves substantial risk of loss. Past performance is not indicative of future results. See our full risk disclaimer.