Sizing per the risk course, and bracket orders

This lesson turns the arithmetic from the risk course into a futures-specific routine, then covers the order mechanics that make the routine automatic. In futures the difference between a plan and a wish is usually whether the stop was in the market before the entry filled, and a bracket order is how you guarantee it.

The sizing routine in futures units

Every trade goes through the same six lines. Write them in the log before the order.

Line	Item	Example (MES)
1	Account equity	$12,000
2	Risk % and dollar budget	1% = $120
3	Stop distance from the chart, in ticks	28 ticks (7 points)
4	Slippage allowance	+2 ticks = 30 ticks
5	Risk per contract = ticks × tick value	30 × $1.25 = $37.50
6	Contracts = floor(budget ÷ line 5)	floor(120 ÷ 37.50) = 3

Actual risk = 3 × $37.50 = $112.50, plus about $3.60 commission, so 1R ≈ $116. The stop goes at the chart level (28 ticks), not at 30; the extra two ticks are what you expect to lose on the fill, not where you place the order.

Two futures-specific checks then follow:

Account leverage: 3 × $25,000 ÷ $12,000 ≈ 6.3×. Fine intraday; too high to hold overnight by the gap rule.
Broker liquidation distance (Module 3, Lesson 3): with $12,000 equity and 3 × $50 day-trade margin, the broker's threshold is nowhere near the stop. Fine.

If either check fails, reduce contracts, not the stop.

Daily loss limit in contracts

The risk course's daily loss limit, say 3R or 3% of the account, translates in futures to a number of full-size losses you can take. At $116 per R and a $360 daily limit, three planned losses end the day. Most futures platforms let you set a hard daily loss lock that blocks new orders once hit. Use it. The point of a rule that fires automatically is that it does not require you to be reasonable at the moment you are least likely to be.

Bracket orders

A bracket (also called OCO with entry, or an ATM strategy on some platforms) is three orders submitted as one:

The entry, market, limit or stop.
The stop-loss, placed automatically when the entry fills, at a set number of ticks from the fill.
The profit target, placed at the same time, at a set number of ticks the other way.

The stop and target are linked as one-cancels-other: when one fills, the other is cancelled. If the entry does not fill, neither exists.

Order type in the bracket	Becomes	Risk if omitted
Entry	Position	None
Stop-loss	Market order when touched	A position with no exit while you are deciding what to do
Target	Limit order	Winners run into reversals while you watch
OCO link	Cancels the other	The other order stays live after exit and opens a new, unintended position

The last row is the one that hurts. If you exit manually and forget the stop, the stop is still resting; when price gets there it fills, and you are now short one contract you never meant to have. A bracket cancels it for you. Every serious futures platform supports brackets, and most let you preset the stop and target in ticks so a single click places all three.

Bracket settings for the example

For the 3-MES example with a 2R target:

Component	Setting	Ticks	Dollars (3 contracts)
Stop	28 ticks from entry	28	$105 at the level, ~$112.50 with slippage
Target	56 ticks from entry	56	$210
Ratio	Target ÷ stop	2.0	About 1.85R realized after costs

Set the bracket once per strategy and leave it. If a setup needs a different stop, change the contract count to fit the budget, or skip the trade. Adjusting the stop after entry to avoid a loss is the single most common way futures traders turn a 1R loss into a 4R loss.

Key idea: Size in six lines from the stop in ticks, check account leverage and liquidation distance, and enter with a bracket so the stop and target exist the instant the entry fills and cancel each other on exit.

Order types worth knowing

Order	Use in futures	Caution
Limit	Entries at a level; targets	May not fill; a target that is not reached is not a loss
Stop (market)	Stop-losses; breakout entries	Fills at market once touched; slippage in fast markets
Stop-limit	Breakout entries where you refuse to chase	Never for stop-losses: it can fail to fill and leave you in
MIT (market if touched)	Targets that must fill	Like a stop in the other direction; small slippage
Trailing stop	Locking gains on runners	Whipsaws in choppy markets; use wide trails or not at all

The rule about stop-limits for stop-losses is not negotiable. A stop-limit can be jumped in a fast market and leave the position open below the limit with no exit, which is the exact scenario a stop is for.

Time in force

Futures orders are day orders by default on most platforms, expiring at the session close (5:00 pm ET, not 4:00 pm). A GTC stop survives the close and the daily break and will trigger at the next open; that is the behavior you want for a held position and the behavior you must cancel if you flatten manually. Check every evening that the working-orders list is empty when the positions list is empty.

Try it: Set up a bracket template on your platform for your chosen micro with your standard stop and 2R target in ticks. Place it on a simulator, exit the position manually, and confirm both remaining orders were cancelled. Then set a daily loss lock at 3R and confirm it blocks a new order.

Recap

Six lines: equity, budget, stop in ticks, slippage, risk per contract, floor(budget ÷ risk). Then check account leverage and liquidation distance.
A daily loss limit in R translates to a number of full losses; set a hard lock on the platform.
Brackets place the stop and target on fill and cancel each other on exit; without the OCO link a forgotten stop opens an unintended position.
Never use a stop-limit for a stop-loss; it can fail to fill.
Confirm working orders are empty whenever positions are empty; GTC stops survive the close.