The 1-2% Rule

Professional traders typically risk no more than 1-2% of their account on any single trade. On a $20,000 account, that's $200-$400 per trade. This rule prevents any single loss from devastating your account.

Calculating Position Size

Formula: Contracts = Account Risk ÷ (Stop Size in Points × Multiplier)

Example: $300 risk, 20-point stop, MNQ ($2 multiplier) = 300 ÷ (20 × 2) = 7.5 → 7 contracts max.

Stop-Loss Placement

• Technical stops: Below support levels, above resistance
• ATR-based stops: 1.5-2× Average True Range from entry
• Percentage stops: Fixed dollar amount based on account size

Risk-Reward Ratio

Aim for at least 1:2 risk-reward — if you risk $300, target $600 minimum. This way you can be right only 35% of the time and still be profitable.

Tools to Help

Use the Futures Calculator to preplan every trade: enter your entry, stop, and target prices to see exact dollar amounts before you click buy.