Position sizing for energy futures

Sizing energy — survive first, optimize second

Energy futures are volatile. We've said it a few times in this chapter, but it bears repeating: a normal daily range in CL is 3-8%. A normal daily range in NG is 5-10%. Those are normal days — meeting days and shock days can be far wider. That means even one full-size contract represents real money in motion. Position sizing in energy isn't a side topic; it's the topic.

Start with the risk-per-trade rule we use throughout Candleread: no more than 1-2% of your account on any single trade. With a $500 account, that's $5-10 maximum risk per trade. With a $5,000 account, $50-100. The math from there is straightforward: divide your max risk by the dollars-per-tick of the product to get how many ticks of stop you can afford per contract, then check whether that distance fits the trade. If it doesn't, the contract is too big — or the trade is.

Energy futures come in three sizes, and matching the product to the account is the first decision. CL (full-size WTI) — $10 per tick, suited to accounts above roughly $25,000 if you want to risk normal stops. MCL (Micro WTI) — $1 per tick, accessible to accounts as small as a few thousand dollars. NG (full-size natural gas) — $10 per tick, but volatility means even modest stops cost $100+. QG (mini natural gas) — $2.50 per tick, more friendly to smaller accounts. If you have to ask whether you have enough capital for full-size, you don't.

Two extra layers of risk that catch new traders. First, overnight gap risk. CL and NG trade nearly 24 hours, but news doesn't always wait for your stop to fill — a weekend OPEC+ announcement or Middle East event can gap the contract 5%+ over a Sunday open. Sizing should assume your stop can be skipped. Second, headline cluster days. OPEC+ meetings, EIA Wednesdays, and major geopolitical events compress a week of volatility into 30 minutes. On those days, size way down or sit flat. Energy rewards survival more than aggression. The traders who stay in the game for years are not the ones who maxed sizing on every move — they're the ones who showed up tomorrow because they didn't break the account today.

Recap: risk 1-2% per trade. Match product to account size — micros and minis for small accounts. Assume stops can be gapped. Size down on OPEC+ and EIA days. Survival is the strategy.