How do you size a position without exceeding your risk?

Set a risk budget first, then divide it by the loss per lot at the stop including costs. Round down to your broker's permitted lot step.

Method, example and limits

A $5,000 balance at 1% risk gives a $50 budget. In an illustrative gold contract of 100 ounces per lot, entry at 4,000 and stop at 3,995 risk $500 per lot, so the size is 0.10 lots before costs. Spread and commissions reduce the allowable size. If below the broker minimum, do not round up: skip the trade. This is a contract example, not a verification of your broker's instrument.

Sources

CME Group — contract / tick education

Methodology guide, not attributed to an unverified expert. Educational material is not personal advice. Content revision: 2026-10-07