Risk Management for Futures Trading

The 2% Rule

Never risk more than 2% of your total account value on a single trade. If you have a $10,000 account, your maximum loss per trade should be $200. This ensures you can survive a losing streak without blowing up your account.

Position Sizing Formula

Position Size = (Account Value × Risk %) / |Entry Price - Stop Loss Price|

Example: $10,000 account, 2% risk, entry at $100,000, stop at $95,000 → Position = ($10,000 × 0.02) / $5,000 = 0.04 BTC ($4,000 position at 2.5x leverage)

Maximum Drawdown Limits

Set a maximum drawdown limit for your account. If you lose 15% of your peak account value, stop trading for the day. Revenge trading after losses is the most common cause of account blow-ups.