Position Sizing for Prop Firm Evaluations and Funded Accounts

Why a funded account breaks differently

On a personal trading account, the only person who decides whether your risk is too large is you. On a prop firm evaluation or funded account there is a second party, and it writes the limits into the contract: a maximum daily loss, a maximum total drawdown, sometimes a minimum number of trading days, and a profit target. Break any one of them and the account is gone, usually without a refund.

That changes what position sizing is for. On your own account, sizing keeps losses survivable. On a funded account, sizing is how you make sure a normal losing streak does not trip a hard rule. The arithmetic is the same arithmetic — the number of constraints just goes from one to three.

Every firm writes its own rules, and they differ on the details that matter most: whether the drawdown is static or trailing, whether the daily loss is measured on closed balance or equity including open positions, and whether there is a consistency rule on how your profit is distributed. Read the terms you actually signed. This page covers the arithmetic those rules force you to do; it cannot tell you your firm's specific numbers.

If you are still picking a firm rather than sizing inside one, those four clauses are the shortlist: drawdown type, how the daily limit is measured, any consistency rule, and whether there is a minimum trading day count. Instant Funding is a prop firm that offers immediate funding on a published rule structure — worth reading its drawdown clause against that list before you pay for an evaluation.

The three budgets, and why the smallest one wins

Your per-trade risk has to satisfy three separate constraints at once:

1. Your own percentage. Whatever you decided to risk per trade on any account, typically 0.5% to 1%.
2. The daily loss limit. Risking half of it on one trade means two bad trades end your day, and possibly your account.
3. The remaining distance to the maximum drawdown. This one shrinks every time you take a loss, which means the correct size shrinks too.

Taking the minimum of three numbers instead of one feels conservative, and it is. That is the point: the failure mode in an evaluation is not "I made too little money", it is "I breached a rule on day four and lost the fee". The tables below show how quickly one choice eats through a daily limit.

A prop firm calculator in the usual sense gives you the lot size from a risk percentage — the first line of the formula above. The second and third lines are the ones that end evaluations, and they are the reason this page runs three budgets rather than one.

How many losses does each choice buy you?

Take a 100,000 USD evaluation account with a 5% daily loss limit (5,000 USD), a 10% maximum drawdown (10,000 USD) and an 8% profit target (8,000 USD). These figures are illustrative; substitute your own firm's numbers.

Read the 2% row carefully. Two consecutive losses and you are at 4,000 against a 5,000 daily limit — a third losing trade of the same size is no longer available to you, even though the setup may be perfect. And five consecutive losses takes the full drawdown. Losing streaks of five are not rare events; they are what ordinary variance looks like. There is no study needed to see this: it is division.

The right-hand column is the counterweight. Smaller risk means more winning trades to reach the target. This is the genuine trade-off in an evaluation, and choosing your per-trade percentage is choosing a point on that curve. The risk-per-trade arithmetic page covers the general version of the same decision.

The budget that shrinks while you use it

The piece most traders miss: after a losing trade, your distance to the maximum drawdown is smaller than it was an hour ago, so the size that was correct before the loss is too large after it. Suppose you decided beforehand that you want to be able to take five more consecutive losses before hitting the drawdown floor. Then your next trade gets one fifth of whatever room is left:

The most counter-intuitive part is the top row: with a full 10,000 of room and a five-loss plan you may risk up to 2,000, which is 2% of the account — larger than the 1% you started with. That is the arithmetic being honest, not permission. Whether you use it is a different question, and most traders answer it by keeping their own percentage as the binding constraint and treating the drawdown room as a safety buffer they never intend to reach.

Recomputing this before every entry is the whole discipline. It is also why "I risk 1%" is not a complete answer on a funded account: 1% of what, measured against which remaining budget?

Turning the budget into lots: EUR/USD example

Say the planned risk for this trade is 1,000 USD, and you are buying EUR/USD at 1.1000 with a stop at 1.0950, a 1-pip spread, commission of 7 USD per standard lot round turn, and a broker that deals in 0.01-lot steps.

Step by step

1. Effective stop distance: 0.0050 + 0.0001 = 0.0051.
2. Loss per standard lot, excluding commission: 0.0051 x 100,000 = 510.00 USD.
3. Add commission: 510.00 + 7.00 = 517.00 USD per standard lot at the stop.
4. Lots: 1,000.00 / 517.00 = 1.934 lots.
5. Round down to the step: 1.93 lots.
6. Check the worst case: 1.93 x 517.00 = 997.81 USD. Inside the 1,000.00 budget.

A 3.4% overshoot looks negligible on one trade. It is not: the reason to hold yourself to a number is so that the twentieth trade is still held to it. Twenty trades each risking 3.4% more than planned is a drawdown budget consumed about two thirds of a trade faster than you think.

Static versus trailing drawdown changes your inputs

Two firms with the same quoted "10% maximum drawdown" can behave completely differently.

Static drawdown. The floor is fixed at 10% below the starting balance and never moves. On a 100,000 account the floor sits at 90,000 for the life of the account, and your room is simply current equity minus 90,000. You can be down 8,000 on Monday and still have 2,000 of room on Friday.

Trailing drawdown. The floor follows your equity high. Start at 100,000 with a 10% trail and the floor is 90,000. Push equity to 108,000 and the floor rises to 108,000 x 0.9 = 97,200. Your room is now 108,000 - 97,200 = 10,800 — larger than at the start, because the room is measured from where you are to where the floor now sits. Profits raise your floor, which means an unsecured open profit that reverses can put you below it.

Whichever type you have, the practical rule is the same: compute your size against the distance from current equity to the current floor, not against the starting balance. On a trailing account halfway through a good month, those two numbers are thousands apart.

One more detail worth checking in your own terms before it bites: some firms count unrealised loss on open positions against the daily limit, others only count closed trades. If floating loss counts, a position that dips well below your stop before recovering has already consumed part of the budget, which argues for smaller size and a stop you actually place rather than hold in your head.

If you are comparing firms against this list, it is worth reading one futures-focused option alongside the forex ones. Earn2Trade runs evaluation programs for futures traders, and the same three budgets apply — daily loss, drawdown, profit target. The advice is identical regardless of the instrument: read the drawdown clause before you pay the fee, because that single sentence decides how your size shrinks mid-evaluation.

The rulebook, reduced to one per-trade number and one per-day number

A rulebook arrives as percentages. Sizing needs two things the percentages do not hand you: the most you may lose on a single trade, and how many of those you are allowed to have before the day is over. Both come from division on the same three inputs — the daily loss limit, the distance from your equity to the drawdown floor, and the number of losing trades you are willing to plan for.

The tables below use the illustrative account already running on this page: 100,000 USD, a 5% daily loss limit (5,000 USD) and a 10% maximum drawdown (10,000 USD). Replace every figure with the ones your own firm published; the shape of the result does not depend on which numbers you put in.

Planning for three losses today leaves 1,666.67 USD per trade, and the remaining 10,000 USD of room absorbs six losses of that size before the floor arrives. Plan for eight losses instead and each one gets 625.00 USD, with sixteen before the same floor. None of this is a forecast — it is one division deciding how thin you are prepared to spread the day.

This is the second number, and it is the one that usually lands: at the firm's own daily limit, the entire drawdown is two days. Cutting the daily figure to 2,500.00 buys four days; 1,000.00 buys ten. "Stop for the day" is not a motivational rule here — it is the purchase of days at a known price, and the price is printed in the right-hand column.

Put the three budgets back together with a concrete plan — three losses allowed today, eight losses of room you want to keep, 1% as your own percentage — and the candidates are 5,000.00 ÷ 3 = 1,666.67 USD from the daily limit, 10,000.00 ÷ 8 = 1,250.00 USD from the drawdown room, and 1,000.00 USD from your own percentage. The smallest wins, so today's ceiling is 1,000.00 per trade, which splits into five losses against the daily limit and ten against the floor. That conversion — rules in, two numbers out — is what people are asking a prop firm calculator for: not lots, but the ceiling the rulebook puts on today.

What sizing up after losses actually costs

The second half of the question arrives after the losses do, because that is when the arithmetic stops being a rule and becomes a decision. On a funded account the decision is taken out of your hands by the floor. Off one — the account you trade with the same method, the fee money you keep paying again — the recovery is yours to earn, and it does not cost what it looks like it costs.

These are the four deepest bands in the drawdown-recovery dataset this site publishes. Each row is what the equity that survived has to grow by to get back to where it started:

Read that second column as a multiplier rather than a percentage and the shape appears: 150.0% is turning 40 back into 100, which is 2.50x. 900.0% is turning 10 into 100, which is 10.00x. The same four rows rearranged, in units per 100 of starting equity, with every column computed from those two:

The identical four rows in money, on a 100,000 account. The fourth column is the second column of the first table turned into cash: after a 70% drawdown there is 30,000 left, and getting back to 100,000 means adding 70,000 to it, which is the 233.3%:

Now fix the multiple instead of the band. Each cell is the remainder multiplied by the column heading, still per 100 of original equity:

Exactly two of those twenty-four cells reach the starting line: x5 on the 80% row and x10 on the 90% row, which are the two reciprocals already sitting in the growth column above. Every cell to the left of them is short, including all four doubles.

Climbing one band at a time is cheaper than climbing in one go, and cheapest where people are least likely to keep doing it:

The column to sit with is the doubling one. From a 70% hole, a 100% gain — the sort of year people put on a banner — lands at 60 of the original 100, still 40 short. Tripling clears the start only on the shallowest of these four rows, and only to 120.

That is the case for making the size after a loss smaller rather than larger. The losing trade already spent room that comes back at the rates above; increasing size to win it back spends what is left faster than any plausible recovery refills it. On a funded account the recovery leg does not exist at all — the floor closes the account first — so the same instinct costs a fee instead of leaving a deficit. Cutting size after a streak feels like abandoning the target; on these numbers it is the only version of the plan that can still reach it.

Rules that are not about size but are enforced through it

• Consistency rules. Some firms require that no single trading day accounts for an outsized share of your total profit, which effectively prohibits betting the target on one oversized trade. If your firm has such a rule, a big position that wins is as dangerous to the account as one that loses. Read the clause and size to stay inside it.
• Minimum trading days. A floor on how long the evaluation must run. It rewards steady small size and punishes trying to hit the target in three sessions.
• Restricted instruments and news windows. Some firms forbid holding positions through certain announcements. A flat instruction, not a sizing instruction — but sizing down does not help you here; being out does.
• Time limits. Some evaluations expire. An expired evaluation has no position size that rescues it.

None of these are arithmetic, and all of them are reasons the "correct" size for a personal account is the wrong size for a funded one.

Two numbers before the entry, and one more after it

Before you click, three figures decide the size: your own percentage of the current balance, the losses the daily limit still allows today, and the distance from your equity to the floor. Divide each one by the number of losses you are planning for, take the smallest result, then pay the spread and the commission out of it and round down to the step your platform accepts.

After you click, check one more thing: how many days of the size you just used still fit inside the drawdown you have left. Ten and twenty read like comfortable margins until you notice they are counted in days — and the day, not the trade, is the unit the firm measures in.

The position size calculator handles the cost-aware part and prints the worst-case loss again once it has rounded. The lot step your broker accepts and today's floors at your firm are the two inputs nobody else can supply.

Open the position size calculator

Questions traders ask

The smallest of three budgets: your own percentage, the daily loss limit, and the room left to the maximum drawdown. Take the minimum. On a 100,000 USD account with a 5% daily limit, risking 1% buys you five consecutive losses before the daily limit and ten before the drawdown — and losing runs of five are ordinary variance, not rare events.

It fits the headline numbers and fails the arithmetic. Two consecutive losses put you at 4,000 against a 5,000 daily limit, so a third trade of the same size is simply unavailable. Five gives up the entire drawdown. It also needs fewer winning trades to reach the target, which is the real trade-off you are choosing between.

It should, because your distance to the drawdown floor shrank. If you planned to survive five more consecutive losses, the next trade gets one fifth of whatever room is left, not one fifth of the original figure. The size that was correct an hour ago is too large after the loss.

The floor follows your equity high. Start at 100,000 with a 10% trail and the floor is 90,000; push equity to 108,000 and the floor rises to 97,200. Your room becomes 10,800 — but an unsecured open profit that reverses can drop you below a floor that has already moved up.

It depends entirely on the firm, and it is worth establishing before it costs you. Some count floating loss on open positions against the daily limit; others count only closed trades. If floating loss counts, a position that dips well below your stop before recovering has already spent part of the budget — an argument for smaller size and for a stop you actually place.

The drawdown divided by what you lose in a day. On the standard example on this page that is 10,000 ÷ 5,000 = 2 days at the firm's own daily limit, 4 days if you stop yourself at 2,500.00 and 10 days if you stop at 1,000.00. This is why a self-imposed daily stop well inside the published one changes the odds: it multiplies the number of days the account can survive, which is a different lever from shrinking each trade.

The arithmetic says no, in two different ways. On a funded account the floor ends the account before a recovery can be earned, and oversized trades are usually what reach the floor. On an account with no floor, the recovery rates above are the price: after a 70% hole you need a 233.3% gain to be whole, and doubling what is left reaches 60 of the original 100 — still 40 short. Cutting size after losses is the only version that leaves the target reachable.

Related guides

• How much should you risk per trade? — losing streaks and drawdown recovery, pure arithmetic.
• How to calculate position size in forex — the four inputs and the full formula.
• Position sizing for crypto futures — contract size, funding rate and liquidation.
• Forex, stock and crypto position size calculator