Position Sizing in Trading: The Complete Guide (Spot, Margin, Futures) + Examples
Position Sizing in Trading: The Complete Guide (Spot, Margin, Futures)
Learn position sizing step-by-step for spot, margin, and futures. Use risk %, stop-loss distance, and leverage correctly to control losses and trade consistently.
Most trading problems are position size problems. Position sizing answers one critical question: how big can you trade so one loss does not hurt you?
What position sizing really is
Position sizing converts account size, risk rule, and stop distance into a concrete size. It makes losses predictable and keeps you disciplined.
The core formula
Position size = Risk amount / Stop distance
Example: Risk $100, stop distance $5, position size 20 units.
Use the tools as a workflow:
Spot sizing (no leverage)
Spot is simple: you buy units and the stop distance defines your loss. Make sure size matches your risk rule and fees are considered.
Margin & futures sizing (with leverage)
Leverage changes margin used, not your risk. Risk still comes from stop distance and position size. Choose leverage last to control margin usage.
Common mistakes
- Picking size first, then placing a stop.
- Increasing size after a loss.
- Ignoring fees and slippage on small targets.
- Stacking correlated trades without a cap.
Quick workflow
1. Set risk % and risk amount. 2. Choose stop level. 3. Calculate size. 4. Check R:R and PnL. 5. Confirm open risk and correlation.
Related guides
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