Position Sizing: A Fixed-Risk Formula
Calculate position size from a risk budget, stop distance, contract value and estimated costs. A worked SET50 example separates trading risk from margin.
By Kru Kook (Krittiya Khunabrimas)
What position sizing answers
Position sizing converts a risk plan into a number of units or contracts. Start with the question, “How much could this position lose if my planned exit is reached?” Do not start with the largest position a broker will allow.
Choose a risk budget first, then use the distance from entry to the stop, the product’s value per point, and estimated costs. The numbers below demonstrate arithmetic only; they do not recommend a risk percentage.
The contract-count formula
Risk budget = account equity × the risk fraction chosen for your plan
Risk per contract = stop distance × value per point + estimated round-trip costs
Maximum contracts = floor(risk budget ÷ risk per contract)
Use the product’s value per point or tick, and include costs on both entry and exit. If the result is less than one contract, the mathematical answer is to skip that position at that size—not to increase the risk budget until one contract fits.
Worked SET50 Index Futures example
Assume account equity of THB 500,000 and use 1% purely as an illustration, giving a THB 5,000 risk budget. Assume a stop 10 index points away, the current SET50 Index Futures multiplier of THB 200 per point, and THB 80 of estimated round-trip costs per contract.
Risk per contract = 10 × THB 200 + THB 80 = THB 2,080. Maximum contracts = floor(THB 5,000 ÷ THB 2,080) = 2. Planned risk is about THB 4,160, leaving THB 840 of the budget unused. A stop order may execute at a different price during a gap or thin liquidity.
The THB 200 multiplier is taken from TFEX contract information checked on 22 October 2026. Verify the current specification before trading.
Keep risk separate from margin
Margin is collateral required by a broker for a derivatives position. A risk budget is calculated from stop distance and contract value. They answer different questions. Having enough margin to open a contract does not mean its market risk fits the account.
After sizing, separately check whether available cash can handle margin changes and losses along the way. Margin rules and fees can change by product, exchange notice, and broker.
A pre-order workflow
- Record the account equity and risk fraction used by your plan.
- Define the price that invalidates the trade idea and measure the stop distance.
- Verify contract size, currency, tick, and value per point from an official source.
- Estimate commissions, exchange fees, spread, and slippage on entry and exit.
- Round down, check margin, and test an exit worse than the planned stop.
- Record the estimate and actual result in a trading journal to improve cost assumptions.
For gold-specific examples, read our gold lot-size and stop-loss guide. You can also test assumptions in the position sizing calculator.
Limits of the calculation
This formula estimates loss at the planned exit; it cannot guarantee the execution price. Markets can gap through stops, orders can be partially filled, and point values differ by product. Do not reuse the SET50 multiplier for Gold Futures, options, CFDs, or forex without checking each contract.
The article does not prescribe a fixed margin or fee. Check the current contract specification and your broker’s schedule before placing an order.