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What Is a Scaling Rule

The scaling rule is a guideline that limits the number of contracts a trader can use based on their current profit level. As the trader earns more profit, the allowed number of contracts increases in phases. This rule is commonly enforced during funded stages and is designed to encourage gradual growth, control risk exposure, and ensure that traders earn the right to trade with larger size through consistent performance.

Not every firm or account type enforces a scaling rule. Some accounts allow full contract usage from the start, while others require traders to scale into size as profits are achieved. Traders should always review the specific conditions of their account to know whether this rule applies.

How It Works

The scaling rule ties maximum position size to the account's profit progression. A trader may begin with a strict contract cap that only allows a small number of contracts. As specific profit milestones are reached, that cap increases in stages. For example, a $100,000 funded account might start with a limit of two contracts, then increase to four contracts once the trader earns $1,500 in profit, and then six contracts once $3,000 is reached.

Each firm defines its own thresholds and contract limits, and the scaling requirements can differ across account types. In some cases, the firm may provide a full scaling plan showing exactly how many contracts are permitted at each profit tier. Other firms may review the trader’s performance and manually approve contract increases based on a combination of profit level and behavior.

Why It Is Used

The scaling rule protects both the firm and the trader from excessive exposure early in the funding process. New traders in a funded account have not yet proven their ability to manage larger size. By enforcing gradual contract increases, firms ensure that traders build into their full position sizing only after demonstrating consistent profitability and risk control.

This rule also encourages traders to develop habits of discipline, as they must manage expectations and work through the levels with structure. It discourages traders from attempting to force profits with oversized trades and instead rewards steady growth through smart execution.

Relation to Other Policies

The scaling rule is closely tied to the maximum position rule. While the maximum position rule defines the total contract cap for a given account, the scaling rule governs how much of that cap can be used at different points in time. Traders may eventually be allowed to use the full position size once they reach the final profit tier, but they must scale into it based on the firm’s rules.

This rule also intersects with DCA behavior, as traders who attempt to average into positions using multiple orders must still respect the scaled contract limits. Even if contracts are entered gradually, the total number of open contracts must remain within the allowed amount for the trader's current profit level.

Summary

The scaling rule limits the number of contracts a trader can use until specific profit milestones are met. As the trader grows the account, the position cap increases in defined stages. Not all firms or account types apply this rule, but for those that do, it is an important part of managing risk and funding progression. Traders should review their account's scaling structure, follow it closely, and manage risk appropriately as their limits change.