How many contracts should I trade per day?

The practical number of contracts to trade per day for most active retail commodity traders is one to three on a single underlying, scaled to account size and stop distance. Pros rarely push past five a day on the same instrument. Everything above that is either a professional firm running multiple setups or a retail trader on the way to blowing up.

The real answer is not a number — it is a formula. You work backwards from the most you are willing to lose in one day, and the lot tells you the contracts.

How to calculate contracts per day from account size

Three inputs decide the answer. Your capital, your risk per trade, and the stop distance in the contract you are trading.

1. Risk per trade

Cap it at 1% of your trading capital. A 5 lakh account risks no more than 5,000 rupees on any single trade. If you take a 2,000 rupee hit, the day is still fine. If you take 10,000, you just doubled your rule.

2. Daily loss limit

Cap total daily loss at 2 to 3% of capital. On a 5 lakh account, that is 10,000 to 15,000 rupees. Once you hit the limit, stop trading for the day — even if you were about to enter a "sure" setup. The rule is the rule.

3. Stop distance times lot size

This tells you the rupee risk of one contract. Cotton on MCX has a lot size of 24,000 kg. A 2-rupee stop per kg equals 48,000 rupees per contract. Mentha oil has a 360 kg lot. A 10-rupee stop equals 3,600 rupees per contract. The same "one contract" can mean very different risk in rupees.

Number of contracts equals allowed risk divided by contract risk. If the lot says 48,000 rupees risk and your per-trade cap is 5,000 rupees, you cannot trade one full lot. You either skip the setup or use a tighter stop.

Position sizing by account capital

A clean table helps. All figures assume a daily loss cap of 2% and a per-trade cap of 1%.

Any time you see a trader with 2 lakh account taking five or six contracts of cotton, you are watching someone one bad day away from losing half the account. The math does not lie.

FAQ in the middle: common beginner questions

Should I count each trade or each contract?

Count both. Two contracts in one trade is one trade, but the risk is double the usual. Keep a daily limit on total contracts (say, 6) and on number of trades (say, 4). Either limit stops the day.

Does the 2% daily cap include stop-out losses on unfilled orders?

Yes. Any money that left your account that day — commissions, rollover costs, overnight funding — counts. The cap is about total damage, not just closed P&L.

Real-world example — 5 lakh account trading cotton

Say you trade cotton on MCX with a 5 lakh account. One lot is 24,000 kg. A recent normal intraday stop is 1.5 rupees per kg, which is 36,000 rupees of risk per contract.

• 1% of capital = 5,000 rupees allowed per trade.
• 36,000 rupee per-contract risk is way above 5,000. You cannot trade one full cotton lot under your rules.
• Option one: trade a smaller MCX contract (cotton mini) with lower lot size.
• Option two: trade a tighter stop of 30 paisa per kg, which brings risk to 7,200 rupees — still above your cap. Still no trade.
• Option three: switch to a commodity where one lot fits inside 5,000 rupees of risk (for example, mentha oil with a tighter setup).

The discipline sounds boring. It is also why some traders survive decades and others blow up in six months.

When to trade fewer or more contracts

Reduce contract count on three kinds of days.

1. High-volatility sessions — monsoon surprises, USDA reports, OPEC news. Stops are wider, so one contract is often the right number.
2. Losing streak — if you are down two days in a row, halve your usual size until you see a win.
3. First hour of the session — liquidity is thinner and spreads wider. Trade smaller sizes until the market settles.

Increase contract count only when three things line up — account has grown 20% beyond your baseline, the setup is your highest-confidence pattern, and volatility is in a normal band.

Contract specifications for every MCX commodity (lot size, tick size, margin) sit on the MCX website. Verify before you size.

Why contract count is not just about margin

Most brokers show you the margin required and the free margin available. New traders multiply free margin by the contract margin and think "I can take six contracts." That calculation ignores stop distance, ignores volatility, and ignores the reality that one adverse move can trigger a margin call before you even react.

Margin is the entry ticket, not the risk ceiling. Your rupee stop is the real constraint. Respect that and you can trade the same commodity comfortably for years.

The real rule of contracts per day

You do not pick a number and build risk around it. You pick a loss limit and let the math tell you the number. For a retail trader with 5 lakh capital, the honest answer is usually one contract, sometimes two on the best setups. Anything more is not trading — it is gambling in a professional costume.