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Position size rounding

Always rounding the calculated quantity down, so rounding error reduces risk instead of adding to it.

Sizing formulas return numbers like 366.7 shares or 2.4 contracts. The rule is simple: round down, every time. Rounding 2.4 contracts up to 3 raises your risk by 25% for no analytical reason.

Rounding down costs almost nothing. Over 200 trades, a systematic round-down might cost 2-4% of gross profit; a systematic round-up adds the same to every loss and to the variance of the whole book, which is a much worse trade.

Watch the interaction with small accounts, where rounding is coarse. Going from 1 to 2 contracts is a 100% increase in risk, so accounts that trade few units effectively size in giant steps. That is an argument for smaller contracts, not for rounding generously.

Related: minimum-position-size, share-sizing-formula, dollar-risk, risk-per-trade

See it drawn

Original diagrams for the ideas on this page. Illustrative, not real market data.

How a position size is worked outAccount size, risk per trade and stop distance feed into one box giving the number of shares.ACCOUNT SIZE$25,000your capitalRISK PER TRADE1%of the accountSTOP DISTANCE$0.50entry to stopPOSITION SIZE500 sharesrisk budget: $25,000 × 1% = $250position size: $250 ÷ $0.50 = 500 shares
Working out a position size. Three numbers decide how big a trade is: the account, the share of it put at risk, and the distance from entry to stop. One percent of $25,000 is a $250 budget, and a $0.50 stop divides into that 500 times.

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