You have a setup you like. 20-tick target, 10-tick stop. That's a 2:1 risk-reward ratio — solid, textbook, the kind of number trading educators put on slides. You've backtested it. Your win rate is around 60%. The math works.
Except it doesn't. Not quite.
On MNQ at $1 per contract commission, trading 2 contracts, your 2:1 setup is actually 1.14:1 after commission. That's not a rounding error. That's the difference between a strategy that compounds and one that grinds you flat.
Most traders don't know their true RRR after commission. Not because they're sloppy — because the math is slightly annoying to do and nobody makes a calculator for it. Until now.
The math, exactly
Here's the full calculation for MNQ, 2 contracts, $1/contract commission:
You thought you were risking $10 to make $20. You're actually risking $14 to make $16. That's a very different trade.
Why this matters more at small contract sizes
Commission drag is proportionally worst on micro contracts. On MNQ at 1 contract, $1 commission is a bigger percentage of your P&L than on NQ at 1 contract. That's not obvious — but here's the comparison:
| Instrument | Tick Value | 20-tick gross win | $1/ct commission | Commission % of win | True RRR |
|---|---|---|---|---|---|
| MNQ (1 ct) | $0.50 | $10.00 | $2.00 | 20% | 1.29:1 |
| MNQ (2 ct) | $0.50 | $20.00 | $4.00 | 20% | 1.14:1 |
| NQ (1 ct) | $5.00 | $100.00 | $2.00 | 2% | 1.96:1 |
| MES (1 ct) | $1.25 | $25.00 | $2.00 | 8% | 1.73:1 |
| ES (1 ct) | $12.50 | $250.00 | $2.00 | 0.8% | 1.98:1 |
Look at NQ vs MNQ. On NQ, your 2:1 is still basically 2:1 after commission — the tick value is large enough that commission is a rounding error. On MNQ at 1 contract, you're giving up 20% of every gross winner to commission. That's not drag. That's a structural handicap.
This is why prop firm traders on micro contracts need to know these numbers. You can have a genuinely profitable strategy on NQ that loses money when scaled down to MNQ without adjusting your setup.
The formula
If you want to calculate this yourself for any setup:
The × 2 in the commission calculation is for round-trip — you pay commission entering and exiting.
What to do about it
Three options, in order of how much you can control:
1. Widen your target relative to your stop
On MNQ with $1 commission, a 20/10 setup gives you 1.14:1. To get back to a true 2:1 after commission, you need roughly a 24-tick target with a 10-tick stop. Run the numbers for your specific commission rate and you'll find the real minimums your setup needs.
2. Negotiate your commission rate
Many prop firms and brokers have tiered pricing. At $0.50/contract instead of $1.00/contract, your 20/10 MNQ setup goes from 1.14:1 to 1.57:1. That's the difference between a marginal setup and a solid one. It's worth a five-minute conversation with your broker.
3. Scale to a higher tick-value instrument when your account allows
If you're trading MNQ because the margin requirements are lower, understand that you're accepting a commission penalty as part of that tradeoff. As your account grows, the move to MES or NQ contracts dramatically reduces commission as a percentage of P&L.
Check your own setup in 30 seconds
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