Module 1F: Futures Foundations · Lesson 8 of 13 · Back to Futures Foundations · Course
What you’ll learn
- the futures position sizing formula
- how to convert risk in pounds to contracts
- worked examples on MES, MNQ, MCL and MGC
- what to do when the answer is less than one contract
- how to size inside a prop firm’s daily loss limit
The formula
Contracts = risk per trade ÷ (stop distance in ticks × tick value)
Always round down. If you get 2.7, trade 2.
Step by step
- Decide your risk per trade in pounds. For example, 1% of a £5,000 account = £50. See the 1% rule.
- Convert to dollars if your contracts are priced in dollars. At £1 = $1.30 (illustrative), £50 = $65.
- Find your stop from your setup – not from how much you’d like to risk – and measure it in ticks.
- Look up the tick value (see 1F.2).
- Divide and round down.
Worked examples
All figures are hypothetical. Risk budget $65 per trade.
| Contract | Stop | Ticks | Risk per contract | Contracts |
|---|---|---|---|---|
| MES ($1.25/tick) | 5 points | 20 | $25.00 | 2 ($50 total) |
| MNQ ($0.50/tick) | 25 points | 100 | $50.00 | 1 ($50 total) |
| MCL ($1/tick) | $0.30 | 30 | $30.00 | 2 ($60 total) |
| MGC ($1/tick) | $8.00 | 80 | $80.00 | 0 – skip the trade |
Notice the last row. If one micro contract is more than your budget, the answer isn’t “trade one anyway”. It’s skip the trade or find a setup with a tighter, still sensible stop.
Add a buffer for costs and slippage
Commissions and fees are charged per contract on the way in and out, and stops can slip (see 1F.7). A simple habit: add 1–2 ticks to your stop distance when you size, so a little slippage doesn’t break your plan.
Sizing inside a prop firm’s limits
In a prop challenge your risk budget is set by the rules, not your bank balance. Suppose a hypothetical account has a $2,000 maximum drawdown and you decide to risk no more than 5% of that per trade: $100.
- MES with an 8-point stop (32 ticks): $40 per contract → 2 contracts ($80).
- Three losers in a row cost $240 – 12% of the drawdown. Survivable.
- Using the maximum 5 ES contracts instead, the same stop would risk 5 × $400 = $2,000. One trade could end the account.
See risk per trade for a prop challenge and 1F.10 Futures prop rules.
Key takeaways
- Contracts = risk ÷ (ticks × tick value). Round down.
- Set your stop from the setup, then size to fit it.
- If one micro is too big, skip the trade.
- Add a small buffer for fees and slippage.
- In prop accounts, size from the drawdown limit, not the contract limit.
Quick check
- Risk $90, MES stop 6 points. How many contracts?
- Risk $40, MNQ stop 50 points. How many contracts?
- Why round down?
Answers: 1) 6 points = 24 ticks × $1.25 = $30 per contract → 3 contracts. 2) 50 points = 200 ticks × $0.50 = $100 per contract → 0, skip it. 3) Rounding up means risking more than your plan.
FAQs
Should I use a fixed number of contracts?
A fixed size is simple, but your risk then changes with every stop distance. Sizing from the stop keeps each loss roughly the same.
What exchange rate should I use?
Use a recent rate and recheck it now and then. A rough figure is fine for sizing as long as you round down.
Disclaimer: This page is general education, not financial, investment or tax advice or a personal recommendation, and it doesn’t take your circumstances into account. Examples are hypothetical, for illustration only, and not an invitation to buy or sell. Learning to trade doesn’t guarantee profits. Past performance is not a reliable guide to future results. Futures, spread bets and CFDs are complex and carry a high risk of losing money quickly because of leverage, and most retail traders lose money. With a real futures account, losses can exceed your deposit. Prop firm challenges are paid evaluations: the fee is usually lost, and funded accounts are usually simulated. Prop firm rules vary between firms and change often, so check each firm’s current rules. Only trade with money you can afford to lose, and speak to an independent FCA-authorised adviser if you’re unsure. Contract specifications, market hours and margin concepts were checked against CME Group on 18 October 2026 and can change. Read our full risk warning.