Position Size Calculator
Quickly compute position size with accurate formulas. See amortization schedules, growth projections, and side-by-side comparisons.
Reviewed for accuracy by Daniel Agrici, Founder & Lead Developer
Position Size Calculator
Calculator
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Formula: Position Size = (Account Balance × Risk %) / |Entry Price - Stop Loss Price|
Worked example — Buy 50 shares | Position: $8,750 | Max loss: $250 (1%)
Formula
Position Size = (Account Balance × Risk %) / |Entry Price - Stop Loss Price|
Divide your dollar risk amount (account × risk percentage) by the price difference between entry and stop loss. This gives you the exact number of shares or units where your maximum loss equals your intended risk. Round down to whole shares for stocks.
Worked Examples
Example 1: Stock Position Sizing
Problem:Account: $25,000 | Risk: 1% | Buy AAPL at $175 with stop loss at $170.
Solution:Risk amount = $25,000 × 1% = $250 Risk per share = $175 - $170 = $5 Shares = $250 / $5 = 50 shares Position value = 50 × $175 = $8,750 (35% of account) Max loss if stopped = 50 × $5 = $250 (exactly 1%)
Result:Buy 50 shares | Position: $8,750 | Max loss: $250 (1%)
Example 2: Crypto Position Sizing
Problem:Account: $5,000 | Risk: 2% | Short BTC at $65,000 with stop at $67,000.
Solution:Risk amount = $5,000 × 2% = $100 Risk per unit = $67,000 - $65,000 = $2,000 Position = $100 / $2,000 = 0.05 BTC Position value = 0.05 × $65,000 = $3,250 Max loss = 0.05 × $2,000 = $100 (exactly 2%)
Result:Short 0.05 BTC | Position: $3,250 | Max loss: $100 (2%)
Frequently Asked Questions
What is position sizing and why is it important?
Position sizing determines how many shares, contracts, or units to buy or sell on a trade. It's arguably the most important aspect of risk management — more important than your entry strategy. Proper position sizing ensures no single trade can significantly damage your account. Without it, even a strategy with a 70% win rate can lose money if the losing trades are too large. The key principle: your position size should be determined by your risk tolerance (usually 1-2% of account) and the distance to your stop loss, NOT by how much capital you have available or how confident you feel about the trade.
How do I calculate the right position size?
Position Size = Risk Amount / Risk Per Share. First, determine your risk amount: Account Balance × Risk Percentage (e.g., $10,000 × 1% = $100). Then calculate risk per share: |Entry Price - Stop Loss Price| (e.g., |$100 - $95| = $5 per share). Finally, divide: $100 / $5 = 20 shares. Your total position would be 20 × $100 = $2,000. This method ensures your maximum loss is exactly your risk amount ($100) regardless of the stock price. Always round DOWN to the nearest whole share to keep risk at or below your target.
What percentage should I risk per trade?
Most professional traders risk 0.5% to 2% of their account per trade. The 1% rule is the most widely recommended: never risk more than 1% of your total trading capital on a single trade. This means with a $10,000 account, your maximum loss per trade is $100. At 1% risk, you can survive 20+ consecutive losses and still have over 80% of your account intact. Beginners should start at 0.5% while learning. Aggressive traders may use 2%, but going above 2% significantly increases the risk of account blowup. A string of 10 losses at 2% each reduces your account by 18%, while 10 losses at 5% each reduces it by 40%.
How does position size change with different stop loss distances?
Position size is inversely proportional to stop loss distance. A wider stop loss means a smaller position (fewer shares), and a tighter stop loss allows a larger position. Example with $100 risk: Stop loss 2% away ($2 risk/share) → 50 shares. Stop loss 5% away ($5 risk/share) → 20 shares. Stop loss 10% away ($10 risk/share) → 10 shares. The dollar risk stays the same ($100) in all cases — only the number of shares changes. This is why scalpers with tight stops can trade larger positions than swing traders with wide stops while maintaining the same risk level.
Should I use the same position size for every trade?
No — your position size should be calculated fresh for each trade based on the specific stop loss distance. Using a fixed dollar amount (like always buying $1,000 worth) is a common mistake because it means your risk varies with each trade's stop loss placement. The correct approach is fixed RISK (e.g., always risking 1% of account), which results in different position sizes depending on the volatility of the asset and distance to your stop loss. Some advanced traders also adjust risk based on conviction level (0.5% for B-setups, 1% for A-setups), but this requires discipline and a proven track record.
What are the different lot sizes in forex and how do they affect risk?
A standard lot is 100,000 units, a mini lot is 10,000, a micro lot is 1,000, and a nano lot is 100 units of the base currency. Smaller lots reduce your dollar-per-pip exposure, making them suitable for beginners or smaller accounts.
How do I calculate position size for proper risk management?
Determine your risk per trade (typically 1-2% of account balance), set your stop-loss distance in pips, then divide the dollar risk by the pip value to get the correct number of lots. This ensures consistent risk regardless of the pair or stop-loss width.
References
Reviewed for accuracy by Daniel Agrici, Founder & Lead Developer · Editorial policy
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