Direct answer
Multiple position sizing is sizing more than one position using inputs that link: (1) your total available risk capacity, (2) the risk you want to spend, (3) how you allocate that risk across positions, and (4) the trade mechanics that convert “risk” into position size. The required inputs fall into four groups: account context, risk rule inputs, per-position price-distance and cost inputs, and constraint inputs (limits that can break the calculation).
Mechanism and definition: what “inputs” means
In this context, an “input” is any variable your sizing method uses to compute an order size (e.g., lots/units) for each position. A multiple position approach must include both stable mechanics and variable conditions. Stable mechanics are things you define once (like a total risk budget and how you allocate it). Variable conditions are things that can differ by market or provider (like the stop distance you plan and transaction costs).
1) Account and instrument context
You need the account currency and a conversion method, because risk calculations are often expressed in account terms. If your stop and entry are quoted in a different currency, you must assume a conversion rate or show the conversion logic you will use.
You also need the instrument contract details relevant to your sizing method (for example, how price movement translates into profit/loss per unit). Without those conversion rules, “risk per position” cannot be converted into a position size.
2) A total risk rule (the “risk capacity” input)
You must define the total risk budget you are allocating to the set of positions (often expressed as a percentage of account equity or a fixed currency amount). You also need the basis for the percentage (commonly equity versus balance), since the same percentage produces different amounts when account components differ.
Assumption to state explicitly: whether the risk budget is for the combined set over the same time window, or for independent events.
3) Per-position risk allocation
You need a rule that allocates the total risk budget across multiple positions. Inputs here include:
- Number of positions in the set.
- Allocation weights (equal risk per position, scaled risk by relevance, or another defined weighting).
- Whether allocations change when one position exits earlier than others.
Assumption to state explicitly: whether the allocations are decided before any execution happens (a static allocation) or can be updated dynamically.
4) Price-distance and stop-related inputs
Sizing depends on how far price can move against the position under your scenario. At minimum, you need the planned entry price and the planned stop level for each position. From these, you derive the stop distance.
Important limitation: the stop distance is an assumption. Real execution can differ from the planned levels due to spreads, slippage, or order handling.
5) Transaction cost inputs that affect effective risk
To make “risk” realistic, you need cost assumptions per position, such as:
- Spread or expected bid/ask difference at entry and exit.
- Any commissions or fees charged per unit.
- If applicable, funding or overnight charges that could matter during holding.
Because costs can shift, treat these as scenario inputs. If you omit them, the computed size may not match your effective drawdown.
6) Constraint inputs (the failure points)
Even with consistent math, multiple position sizing can fail due to constraints. You should include inputs for:
- Margin or leverage limits (can you open all positions at the computed sizes?).
- Exposure limits you impose (for example, limits per instrument, or limits on correlated exposure).
- Platform constraints such as minimum trade size and step size.
Evidence or example (with stated assumptions)
Consider two positions that share one total risk budget. Inputs:
- Total risk budget: 1 unit of account currency (assume this is the maximum you want to lose across both positions in the scenario).
- Allocation weights: 50/50, so each position receives 0.5 currency units of risk.
- For each position, you assume an entry price and a stop level, producing a planned stop distance.
- You assume transaction costs per position (for example, an expected spread component and a commission model) so you can adjust the effective risk.
- You assume contract conversion from price movement to profit/loss in account currency.