Sizing: from risk to whole contracts

The budget exists. The stop distance exists. This lesson divides one by the other, and takes the floor.

The chain, in commodity units

Each contract's risk is the stop distance - in the quoted price's own units, dollars per barrel - times the units in a contract. A $1.50 stop on 1,000 barrels is $1,500 a contract before conversion; your account currency arrives via the rate, exactly as module 1's notional lesson taught. Divide the cash at risk by that figure and the budget names its size.

Round down. Always. Even from 1.9.

A fractional answer is not a holdable position. Rounding 1.69 up to 2 contracts carries 18% more risk than the account chose - a silent renegotiation of the only fixed number in the plan. Down is the rule, and the risk actually carried at the whole size sits below budget as a result. That gap is information: it is slack the plan can spend elsewhere, or keep.

Zero is an answer

Sometimes one contract's risk already exceeds the budget, and the floor is zero. Commodities produce this outcome constantly - the contracts are simply big - and the honest responses are a wrapper that slices smaller, a deliberately revised budget, or no trade. What is never a response is nudging the stop closer until the arithmetic behaves; that is lesson 1's sequence run backwards, and the market does not honour it.

Work the example in your currency, then size a trade you have no intention of taking. The habit being built is mechanical: budget, stop, divide, floor - in that order, every time, until it stops feeling like a procedure.