Risk sizing · standard 6A and Micro M6A
ATR Position Sizing for 6A Australian Dollar Futures
ATR does not tell you where to enter or where your idea is wrong. It tells you how much price has been moving. Use that context to test an invalidation level, translate the distance into dollars and accept the contract count the risk budget can actually support.
- 6A tick
- 0.00005
- 6A tick value
- $5
- 0.0009 move
- $90
- Rounding
- Down
risk budget÷risk per contract=contractsRound down to a whole contract. Add fees and realistic slippage before dividing. If the result is below one, the answer is zero standard contracts.
Never round upNever force a trade
Direct answer
ATR Is a Volatility Input, Not a Complete Risk Plan
The defensible sequence is: define the thesis, identify the price that invalidates it, compare that distance with recent ATR, convert the distance into dollars, add costs and adverse-fill allowance, then divide a fixed loss budget by the per-contract amount. Reversing that order encourages you to move the stop just to manufacture a larger position.
ATR answers
How wide has price been moving?
Average True Range summarizes recent ranges for the selected bars and lookback. It gives a consistent unit for comparing a quiet hour with an active hour or a calm week with a volatile one. The 6A volatility-cluster guide explains why regimes can persist and then change.
ATR does not answer
Where is the trade thesis wrong?
A chart level, event outcome or time-based condition should define invalidation. One ATR can be inside obvious structure or far beyond it. A multiple is a measurement choice, not evidence that the stop is economically meaningful.
A stop becomes an order when triggered. In a fast or gapping market, the fill can be worse. Planned risk should include an adverse-fill allowance, and tail loss can still exceed that plan.
Measurement
Compute ATR on the Instrument and Horizon You Trade
True range for a bar is the largest of: high minus low, absolute high minus previous close, or absolute low minus previous close. ATR smooths those true-range observations over a chosen lookback. Platforms may use different initialization or smoothing, so two values can differ slightly without either feed being fraudulent.
| Choice | What it changes | Reasonable control | Failure to avoid |
|---|---|---|---|
| Contract month | Underlying bars, gaps and liquidity | Use the executable 6A month | Sizing from a back-adjusted continuous chart without checking the live contract |
| Bar interval | Range horizon | Match the entry and holding plan | Using daily ATR for a five-minute stop without translation |
| Lookback | Responsiveness versus stability | Set it before evaluating the trade | Changing it until the desired size appears |
| Session template | Which bars and gaps count | Use the same template in research and execution | Comparing a full-session ATR with a restricted-session ATR as if identical |
| Roll treatment | Artificial range around contract changes | Inspect raw contracts near the roll | Treating a back-adjustment artifact as tradable volatility |
ATR is backward-looking. It describes the selected sample and calculation. It does not estimate the full loss distribution, event probability, spread, market depth or next bar.
Invalidation first
Choose a Stop That Belongs to the Thesis
A breakout trade might be invalid below accepted value. A macro swing might be invalid after a specific data outcome or rate repricing. An intraday setup might expire at a time cutoff. ATR helps diagnose whether the implied price stop sits inside ordinary noise; it does not replace the reasoning.
Write the thesis
State what should happen, over what horizon and which observable evidence would contradict it.
Mark invalidation
Choose the price, event or time condition before looking at the desired contract count.
Measure the distance
Subtract entry from price invalidation and compare the absolute distance with the relevant ATR.
Reject bad geometry
If the stop is inside normal noise or so wide that size becomes zero, change the setup or skip it. Do not move the stop for ego.
Price crossing a level demonstrates that the proposed auction behavior failed. The level still needs enough room for ordinary volatility.
A release or policy outcome invalidates the macro path. Price risk remains until the position is actually exited.
The expected move fails to develop by a planned deadline. This can prevent an intraday thesis from becoming an accidental swing.
An ATR multiple is acceptable only when the method defines and validates why that multiple belongs to the setup.
Sizing formula
Convert the Stop Distance Into Honest Per-Contract Risk
Current standard 6A represents 100,000 AUD. The cleanest calculation uses the price distance directly. Tick math is a cross-check.
Standard 6A
Price-distance method
distance × 100,000A 0.0009 distance is $90. It is also 18 current outright ticks of 0.00005, and 18 × $5 = $90. A 0.0012 distance is 24 ticks and $120.
Full budget method
Include friction before dividing
floor(budget ÷ (stop risk + fees + slippage allowance))If the budget is $250, price risk is $120 and planned friction is $10 per contract, floor(250 ÷ 130) equals one contract. Two contracts would plan $260, already beyond budget.
- Set a dollar risk budget.Base it on the account plan, not the broker's available margin.
- Calculate entry-to-stop price risk.Use the planned executable entry, not the current mid-price if they differ.
- Add commissions and fees.Use round-trip costs for the actual account and product.
- Add an adverse-fill allowance.Estimate from comparable conditions; do not call it a guarantee.
- Divide and round down.Whole futures contracts only. Never round a risk result upward.
- Run a tail scenario.Ask what happens if the fill is materially worse or margin rises.
Worked examples
The Correct Result Is Often Smaller Than the Desired Trade
These examples are arithmetic, not recommendations. Commissions and slippage allowances are illustrative and must be replaced with account-specific evidence.
| Input | Example A | Example B | Example C |
|---|---|---|---|
| Recent ATR | 0.0009 | 0.0009 | 0.0014 |
| Thesis stop distance | 0.0009 | 0.0012 | 0.0018 |
| Standard 6A price risk | $90 | $120 | $180 |
| Illustrative friction allowance | $10 | $10 | $15 |
| Risk budget | $250 | $250 | $175 |
| Calculation | floor(250 / 100) | floor(250 / 130) | floor(175 / 195) |
| Standard contracts | 2 | 1 | 0 |
Zero contracts is a valid risk decision. Replacing the structural 0.0018 stop with a random 0.0008 stop merely to buy one standard contract changes the trade. Evaluate M6A with its own 10,000 AUD unit and 0.0001 tick, or pass.
Failure cases
ATR Sizing Fails When the Inputs Are Dishonest
The formula is easy. The judgment is in the inputs and the operational controls around them.
RBA, FOMC, ABS, U.S. or China surprises can overwhelm a quiet lookback. Scheduled events require a separate rule.
ATR from a continuous chart can include a roll artifact or differ from the executable month's liquidity and price.
Ignoring spread, commission and slippage makes the contract count look safer than it is.
A 14-bar ATR and a $137 budget do not make future loss predictable to the dollar.
Available buying power is not permission to increase size beyond the loss budget.
Multiple AUD, commodity or equity positions can share the same shock. Per-trade sizing can miss portfolio concentration.
Frequently asked questions
6A ATR Sizing: Quick Answers
How do you size a 6A position with ATR?
Use ATR to describe recent range, place the stop where the trade thesis is invalid, convert the entry-to-stop distance into dollars, add costs and adverse-fill allowance, divide the fixed risk budget by that per-contract risk, and round down.
What does a 0.0009 ATR equal on standard 6A?
A 0.0009 move equals 18 current standard 6A outright ticks because each tick is 0.00005. At $5 per tick, that price distance equals $90 per contract before costs and slippage.
Should a 6A stop always be one ATR away?
No. ATR measures recent range; it does not identify where a trade thesis becomes wrong. Choose a structural or event-based invalidation first, then use ATR to judge whether that distance is ordinary, unusually tight or unusually wide.
What if the 6A sizing formula returns zero contracts?
Do not round up. A zero result means one standard contract exceeds the defined risk budget at that stop. Evaluate M6A with its own tick math or skip the trade; changing the stop only to force size corrupts the setup.
Does ATR protect a 6A trade from news gaps?
No. ATR is backward-looking and a stop is not a guaranteed fill. RBA, Federal Reserve, Australian, U.S. or China surprises can create ranges and slippage beyond the recent ATR, so event risk needs a separate allowance or no-trade rule.
Sources, method and editorial disclosure
- CME Group FX Product Guide 2026 for current 6A and M6A contract units, outright increments and settlement.
- CME performance bonds and margins for the exchange collateral framework.
- CFTC futures market basics for leverage, risk capital and intermediary due diligence.
- NFA investor resources for futures-account and risk education.
- CME Rulebook Chapter 255 for the governing 6A contract.
Sources were reviewed August 13, 2026. ATR definitions and worked examples are transparent arithmetic, not a backtest, volatility forecast or recommended risk percentage. Illustrative cost allowances are not broker quotes. Replace them with evidence from the actual account and comparable orders. This is original editorial work and is not sponsored by CME, CFTC, NFA or any broker.