Core concept · Free
Standard position sizing — risk 1-2% of account capital per trade — doesn't transfer to funded accounts. The account capital is simulated. What actually controls how many contracts you can trade are two separate rule layers: the distance between your current equity and the trailing drawdown floor, and your firm's daily loss limit. Each one imposes an independent ceiling on per-trade risk. Whichever ceiling is lower is your maximum size for that session — calculated before you place your first trade, not estimated during it.
Companion to "Trailing drawdown explained", "The daily loss limit explained", and "The consistency rule explained." This page translates those three mechanics into a pre-session sizing number.
Part 1 of 4 — Why the retail frame doesn't transfer
Retail traders risk a fixed percentage of capital per trade so they can sustain a losing streak without blowing up. Funded accounts have an additional layer: the capital is simulated, and three separate rules — each independently terminal — govern how much you can lose. The percentage-of-capital frame collapses when the relevant limits are not percentages of account size.
On a retail $100,000 account, risking 1% per trade means $1,000 per trade. The goal is to survive a 20-trade losing streak without losing more than 20% of capital — simple math against a single account balance. On a funded $100,000 account, the $100,000 is the evaluation's notional size, but the constraints that actually kill the account are the trailing drawdown amount (e.g., $3,000) and the daily loss limit (e.g., $1,000). A $1,000 per-trade risk — the retail 1% figure — could blow the daily loss limit in a single trade and fail the evaluation before any drawdown floor concerns arise. The constraint system, not account size, drives funded position sizing.
A funded evaluation can fail in three separate ways. First: the trailing drawdown floor rises until the account balance touches it — the slow-burn failure mode across sessions. Second: a single session's losses hit the daily loss limit — the one-session failure mode. Third (at payout stage): a single day's profit exceeds the consistency rule cap — the outsized-win failure mode. Each constraint is independent. Surviving the trailing drawdown floor does not protect you from a DLL breach. Surviving both does not protect you from a consistency rule violation at payout. Position sizing must satisfy all three simultaneously — not just whichever one is most salient at any given moment.
The most frequent mistake is carrying retail sizing habits into a funded evaluation. A trader comfortable with a $500 stop on 2 contracts — $1,000 per trade — opens a funded evaluation with a $1,000 DLL and places that first trade. A single full-stop loss ends the day and, on most platforms, the evaluation. The DLL was not in their sizing calculation because the retail risk frame doesn't include it. The fix is to calculate your funded maximum per-trade risk before your first session — not to adjust it reactively after a bad trade. Both constraints are knowable in advance; the math takes under two minutes.
Part 2 of 4 — The first constraint
Your trailing drawdown floor is the lower bound your account equity cannot breach. The distance between your current equity and that floor is the safety buffer you are managing. Position sizing that respects this constraint ensures a streak of full-R losers cannot reach the floor.
Floor distance (DTF) is calculated as: current account equity minus the trailing drawdown floor position. On day one of a $50,000 evaluation with a $2,500 trailing drawdown, DTF = $50,000 − $47,500 = $2,500. As the account earns profit and the intraday-trailing floor rises, DTF changes with it. On an EOD-trailing account, the floor only moves when you close a session at a new account high — so DTF is more stable session-to-session. Knowing your DTF at the start of every session is the first step in funded sizing math. Estimating it from memory is insufficient; write it down before the session opens.
Divide your current DTF by 10 to get your maximum per-trade risk from the drawdown-side constraint. At DTF = $2,500, maximum per-trade risk = $250. This gives you headroom for 10 consecutive full-R losers before your equity touches the trailing drawdown floor. Ten consecutive full losers with zero partial wins is an extreme scenario for most structured setups — meaning the rule is conservative by design, not a realistic worst-case expectation. The goal is that position sizing never puts you one bad session away from a floor breach. DTF/10 guarantees that even a catastrophic session (10 straight full losers) leaves the account alive.
On an intraday-trailing account, DTF can tighten during a session even on a profitable day: if the account reaches an intraday high and the trailing floor advances, then gives back those gains before the close, DTF at the end of the session may be smaller than at the open. On an EOD-trailing account, DTF only tightens when the close is at a new equity high that advances the floor. After a losing session, DTF shrinks by the session loss — your floor-distance sizing ceiling for the next session is lower. After a profitable session, DTF may widen (EOD-trailing) or hold (intraday-trailing, if profits are retained). Recalculate DTF before every session — do not carry forward a number from two days ago.
Part 3 of 4 — The second constraint
The daily loss limit is a per-session cap that operates independently of your trailing drawdown floor. It resets each morning. Breach it in a single session and the evaluation ends — regardless of how much floor distance remains. It requires its own sizing calculation before each session.
Divide your daily loss limit by 4 to get your maximum per-trade risk from the DLL-side constraint. On a $1,000 DLL, maximum per-trade risk = $250. This means 4 consecutive full-R losers in a session consumes exactly the DLL — the evaluation fails on the 4th. DLL/3 gives $333 per trade with 3-loser headroom. Most funded traders use DLL/4 as the default for more conservative sessions and DLL/3 during higher-conviction setups where they expect fewer trades. Neither is wrong — the trade-off is between headroom and being able to reach the profit target in a reasonable number of sessions at that size.
A $500 loss on Monday does not reduce Tuesday's DLL headroom. The session counter resets. But Monday's $500 loss did reduce DTF by $500 — and that floor-distance change does not reset. This asymmetry is the reason both constraints need separate calculations: the DLL gives you a clean slate each morning, but the floor-distance ceiling compounds across sessions. A five-day losing streak where each day stays inside the DLL but costs $500 reduces DTF by $2,500 — at that point, the DTF/10 ceiling may force you to size smaller than the DLL alone would require. Both constraints are always in play simultaneously.
Once you are in a live session, the DLL constraint tightens as losses accumulate. After a $200 loss on a $1,000 DLL account, your remaining DLL headroom is $800 — not $1,000. The sizing calculation for the next trade must use remaining headroom ($800 / 4 = $200 per trade, down from $250), not the opening DLL. This intraday recalculation is especially important after two consecutive losers: at $400 in losses on a $1,000 DLL, remaining headroom is $600 and your maximum next trade is $150 — even if your original pre-session calculation allowed $250. Funded traders who skip intraday DLL tracking are the ones who fail evaluations on trade 3 of a session with a $1,000 DLL and $300 per-trade risk.
Part 4 of 4 — Putting it together
Two constraint ceilings. The lower one wins. Translating that dollar amount into a contract count for the specific instrument you trade is the final step — and it changes with stop width, not just position size.
Before every session: calculate your current DTF, divide by 10 to get the floor-distance ceiling. Look up your DLL, divide by 4 to get the session ceiling. Write both numbers. Take the smaller as your maximum per-trade risk for the session. On a $50,000 evaluation with $2,500 DTF and $1,000 DLL: floor-distance ceiling = $250, session ceiling = $250 — they happen to match. As the account grows and the floor advances, DTF may widen (more floor-distance headroom) while the DLL stays constant — the DLL becomes the binding constraint. Conversely, a losing streak shrinks DTF faster than DLL, making the floor-distance constraint binding. Track which one is actually controlling your size each session.
Dollar per-trade risk = contracts × points stopped × point value. For /ES futures ($50/point): at $250 max risk with a 5-point stop, you can trade 1 contract ($250 = 1 × 5 × $50). With a 2.5-point stop, you could trade 2 contracts at the same $250 risk. For /MES micro-ES ($5/point): $250 risk with a 50-point stop = 1 contract. Your stop placement — which should come from the actual setup, not from reverse-engineering a contract count — determines how many contracts satisfy the dollar constraint. If a valid stop placement at 1 contract produces a dollar risk below the ceiling, you can add contracts up to the ceiling. Never widen a stop to accommodate a larger position; the stop exists to define when the setup is wrong, not to fit a size preference.
On some evaluations — particularly those with small DLL amounts relative to the profit target — the sizing constraints produce a per-trade risk so small that reaching the profit target in the evaluation window is mathematically unrealistic at normal win rates. The response is not to break the sizing rules; it is to re-evaluate the evaluation structure. If $250 per trade with a $3,000 profit target and a 50% win rate requires an average 2:1 R-multiple and 24 winning trades, check whether the minimum-day requirements and evaluation window allow that. If the math doesn't close, the evaluation is structurally incompatible with your system at that risk level. Choose a different account size, a different firm with a larger DLL-to-profit-target ratio, or accept that the evaluation timeline is longer than average at the required sizing.
Common questions
The answer depends on two numbers specific to your account: trailing drawdown amount and daily loss limit. On a typical $50,000 evaluation with a $2,500 trailing drawdown and a $1,000 DLL, starting floor distance is $2,500 (DTF/10 = $250 max per-trade risk) and the DLL constraint is also $250 per trade (DLL/4 = $250). At $250 per trade on /ES with a $50/point value, a 5-point stop allows 1 contract. For /MES micros at $5/point, $250 allows a 50-point stop on 1 micro contract. The contract count is not fixed — it shifts with your stop width and instrument. Run the constraint math first, then translate the dollar ceiling into contracts given your planned stop placement and instrument point value.
Your maximum per-trade risk on a funded account is the smaller of two calculations: (1) current floor distance divided by 10 — this gives 10-loser buffer before hitting the trailing drawdown floor; and (2) daily loss limit divided by 4 — this gives 4 consecutive-loser headroom per session. Whichever number is smaller is your binding ceiling for that session. Both numbers change as the account moves: the floor-distance constraint tightens when equity drops toward the floor, and the DLL resets each morning. Calculate both before every session, record them, and trade the smaller number as your max risk per trade.
The consistency rule primarily constrains your upside — it caps how large any single profitable day can be as a share of total earnings. The main sizing implication is on strong days: if you are running well and tempted to add contracts mid-session, the consistency rule limits how far any one day's gains can go without blocking the payout. The practical approach is to hold consistent sizing on strong days rather than scaling up on momentum. One outsized winning day that triggers a consistency rule violation is not recoverable in the same evaluation cycle. Consistent sizing across all sessions beats variable sizing with a single large-day outlier on accounts where the consistency rule applies to payouts.
Yes — the sizing math automatically produces a smaller number after a loss, so resizing downward is built into the process rather than being a separate decision. After a losing session, floor distance shrinks by the session loss (DTF tightens), giving a smaller DTF/10 ceiling for the next session. Intraday, after 1 or 2 losers, remaining DLL headroom decreases — the DLL constraint for subsequent trades in that session is tighter. Recalculate both constraints after each losing trade in a session and before the next session opens. The math does the sizing adjustment automatically; you do not need to make a subjective decision about whether to reduce size after a loss.
The retail 1% rule — risk no more than 1% of account capital per trade — is designed for a single constraint: do not blow your account equity. On a $100,000 retail account it gives $1,000 per-trade risk with no other constraints. On a funded $100,000 account with a $3,000 trailing drawdown and $1,000 DLL, the same 1% rule would give $1,000 per trade — which represents the entire daily loss limit in a single trade. The funded sizing constraints are not percentages of account size; they are specific dollar figures set by the evaluation structure. Use DTF/10 and DLL/4 as the input numbers, not a percentage of notional account capital.
Once you're funded, your real education starts.
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