Sizing Futures Positions Before Adding Leverage

Most people choose leverage first and position size second, which is backwards. Leverage does not change how much you can lose on a trade; it changes how much margin is locked and how close the liquidation price sits to your entry. The size decision comes first, and it should be driven by three things you already know before you open the order: where your stop belongs on the chart, how much of your account you are willing to lose if that stop is hit, and how much room the position needs before liquidation becomes the real exit instead of your stop. On Singapore-based accounts this matters because the same notional exposure can be packaged at very different leverage settings depending on the contract and the margin mode you pick, and the interface will happily let you choose a setting that puts liquidation inside your stop zone. The method below is a worksheet, not a recommendation: you supply the numbers, the platform supplies the contract specifications, and your own records keep you honest across a series of trades.

Decide your risk amount before you look at the chart

Start with the account, not the setup. Pick a fixed fraction of your futures wallet balance that a single trade is allowed to lose if the stop is hit, and write that figure down as a currency amount rather than a percentage, because a number you can see is harder to quietly inflate on a bad day. If you trade several positions at once, decide whether that figure is per trade or shared across all open positions; the shared version is stricter and easier to audit later.

This amount is a ceiling, not a target. If the setup is unclear, the correct move is to reduce the amount further or skip the trade, not to widen the stop until the position fits. Record the date, the instrument, the risk amount and the reason for the trade in the same place every time so that a run of losses is visible as data instead of a feeling.

Keep this number separate from your margin. Margin is collateral the platform holds; risk amount is what you have decided to part with. Confusing the two is the single most common reason a position ends up far larger than intended.

Translate your stop distance into position size

Once you know where the stop belongs based on the chart, measure the distance between your intended entry and that stop in price terms, then convert it into ticks or points using the contract specification for the instrument you are trading. The contract specification tells you the tick size, the contract multiplier and the minimum order increment, and it is the only place those values should come from.

Position size is then the risk amount divided by the loss per contract at that stop distance. Work it out on paper or in a spreadsheet before you open the order ticket, and round down to the nearest allowed increment rather than up. Rounding up is a silent increase in risk that compounds over dozens of trades.

If the resulting size is below the minimum order size, the trade does not fit your risk plan at that stop distance. The honest options are to skip it, wait for a tighter setup, or accept a smaller stop with the understanding that a smaller stop is more likely to be hit by ordinary noise. Do not solve the problem by enlarging the risk amount.

Choose margin mode and leverage after the size is fixed

With size settled, leverage becomes a mechanical question: how much margin do you want locked for this notional exposure, and where does that place the liquidation price relative to your stop? Check the position and margin documentation in the help centre for how isolated and cross margin behave on the contract you are using, because the same size produces very different liquidation distances under each.

A useful check is to compute the approximate liquidation price at the leverage you are considering and compare it with your stop. If liquidation sits between your entry and your stop, your stop is not really your exit; the platform's liquidation engine is. In that case lower the leverage, reduce the size, or add margin until the stop is the binding constraint.

Higher leverage does not increase the loss at your stop, but it does shrink the distance to liquidation and it ties up less margin, which makes it tempting to add a second and third position. Count total open risk across all positions against the same ceiling you set at the start, and stop opening new trades when the ceiling is reached.

Account for fees, funding and the costs of holding

Fees and funding are part of the trade's cost and therefore part of the size calculation, even though they are not part of the stop. Look up the current maker and taker rates on the fee page for your account tier, and check how funding is applied on the perpetual contract you are trading, including how often it is charged and which side pays.

Estimate the round-trip cost for your intended size and subtract it from the risk amount, or treat it as an additional fixed cost you accept on every trade. Either way, write the assumption down. A strategy that looks marginally profitable on price movement alone can be unprofitable once repeated taker fees and funding payments are included, and the effect grows with how often you trade.

If you hold a position through several funding intervals, the accumulated cost can approach your original risk amount even if price barely moves. Decide in advance how many funding intervals you are willing to pay for, and treat that limit as a stop condition alongside the price stop.

Build a repeatable pre-trade routine and review it

Turn the steps above into a short checklist you run before every order: risk amount confirmed, stop distance measured from the chart, size calculated and rounded down, margin mode and leverage chosen so that liquidation sits beyond the stop, fee and funding assumptions noted, and a written reason for the trade. Keep the checklist where you place orders so it is hard to skip under time pressure.

Review the journal on a fixed schedule, comparing planned risk with realised loss on closed trades. Persistent gaps usually come from one of a few places: moving the stop after entry, adding to a losing position, trading a size that was never calculated, or forgetting that funding was being charged. Each of those has a specific fix, and the journal is what makes the pattern visible.

When something about the contract specification, margin behaviour or fee schedule is unclear, check the help centre and the fee page for the exchange you use rather than relying on memory or on what someone posted in a chat. Interface details and product rules change, so verify the current wording and record the date you checked it.

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Scenario checkpoint

• Write down the risk amount for this trade as a currency figure before opening the order ticket
• Measure the stop distance from the chart and convert it using the contract specification, not from memory
• Calculate size as risk amount divided by loss per contract at that stop, then round down to the allowed increment
• Confirm margin mode and leverage place the liquidation price beyond your stop, not between entry and stop
• Note current maker and taker rates and the funding interval, and decide how many funding payments you will accept
• Log entry, stop, size, leverage, fees assumed and the reason for the trade in one place for later review