GLOSSARY · RISK & PERFORMANCE
What is Position Sizing?
Position sizing is choosing how many contracts to trade so a stop-out costs a fixed amount.
Formula: contracts = dollars you're willing to risk ÷ (stop distance in ticks × tick value). Most traders risk 1–2% of the account per trade.
Sizing by risk — not by margin or gut feel — is what keeps one bad trade from damaging an account.
EXAMPLE
$50,000 account, 1% risk = $500. NQ stop of 25 ticks × $5 = $125 per contract → 4 NQ contracts (or 40 MNQ).
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