Position size calculator

How the number is worked out

Position size does not depend on how good the trade looks. It depends on three things: how much you have, how much of it you are willing to lose on one idea, and how far your stop is from your entry.

risk amount  =  account × risk %
risk per share  =  | entry − stop |
shares  =  risk amount ÷ risk per share

With a $10,000 account risking 1%, you are willing to lose $100. If you buy at $50 and your stop is at $47.50, each share can lose you $2.50. So you buy 40 shares: if the stop is hit, you lose $100, exactly as planned.

It works the same for a short

The calculator uses the distance between entry and stop, so it does not matter which side of the entry your stop sits on. A stop above the entry simply means you are short.

Why the position can be larger than your account

A tight stop produces a large share count, and the total position value can exceed the cash you hold. That is not a mistake in the arithmetic — it means the trade needs margin. The calculator flags it when it happens, because it is the point at which a position stops being conservative no matter how small the percentage looked.

What percentage should you risk?

• 1% is the conventional starting point. Ten losses in a row costs about a tenth of the account.
• 2% is aggressive. A run of ten losses takes roughly a fifth.
• Under 1% is common for people trading a larger account or a strategy that takes many trades a week.

Which number you pick matters less than using the same one every time. The calculator does not choose for you.

Rounding

The share count is always rounded down. Rounding up would put the risk above the limit you set, which defeats the purpose of setting one.