Position Sizing for Funded Accounts: Formulas, Drawdown Math and Examples

The correct position size is the smaller of two limits: the size permitted by your risk budget and the maximum size permitted by the firm. Start with the account’s current drawdown cushion, decide how much of that cushion one trade may consume, and divide that amount by the loss per lot or contract at the stop. Never size from buying power alone. The practical formula is: position size = trade risk budget ÷ (stop distance × value per point, pip or tick) . Round the result down to a tradable increment, then verify that spread, commission, slippage, open losses and correlated exposure cannot push the total beyond your intended risk. Figures in this guide were checked against the Nexafinity database and the sources listed below, but firm rules and contract specifications can change. Why the headline balance is not your risk budget A funded account labelled $100,000 does not normally allow a $100,000 loss. The binding number is the distance from current equity to the applicable loss floor. Depending on the program, that floor may be static, calculated daily or trail an equity high. Before sizing a trade, identify which method applies and whether unrealized profit or loss enters the ca…