Position Size Calculator
Quickly compute position size with accurate formulas. See amortization schedules, growth projections, and side-by-side comparisons.
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 do you do when the calculated position costs more than your account balance?
This happens whenever the stop is very close to entry, because position value equals your risk amount divided by the stop distance expressed as a fraction of price. Risking $100 with a stop just one percent away implies a $10,000 position, which is the entire balance of a $10,000 account. The answer is never to borrow more leverage to force the trade through. Either widen the stop to a level that genuinely invalidates the idea, which shrinks the position, or accept a smaller risk amount, or add a cap such as no single position exceeding twenty-five percent of equity.
How do you use Average True Range to choose the stop distance before sizing?
Placing a stop at a round percentage ignores how much the instrument normally moves, so it is either inside the daily noise or absurdly far away. A volatility-based stop instead sets the distance as a multiple of Average True Range, commonly one and a half to three times the ATR of the timeframe you trade. Feed that price into the stop loss field and the position size adjusts automatically: high-volatility instruments get smaller positions, quiet ones get larger, and the dollar risk stays constant across the whole portfolio. That consistency is what makes results comparable between very different markets.
Does this calculation guarantee that your loss will not exceed the risk amount?
No. It guarantees the loss if the stop is filled at the stop price, which is not the same thing. A stop order becomes a market order when triggered, so an earnings gap, an economic release, or a weekend move in a market that trades continuously can fill it well beyond the level you set. Illiquid small caps and thin overnight sessions are the usual culprits. Traders who hold through scheduled events either reduce size below the formula's output or use options to define the loss, since only a defined-risk instrument caps it absolutely.
How does the Kelly criterion relate to the fixed-percentage approach used here?
Position Size Calculator applies fixed-fractional sizing: the same percentage of equity is risked on every trade, regardless of the setup. The Kelly criterion instead derives the theoretically growth-optimal fraction from your edge, using f equals W minus (1 − W) divided by R, where W is win rate and R the reward-to-risk ratio. A system winning half its trades at two to one gives 0.5 − 0.5 / 2, or 25 percent. That figure is far too volatile to trade in practice, and it collapses if the estimated win rate is optimistic, which is why most professionals use a small fraction of Kelly or a flat one to two percent instead.
Why does the calculator round down to whole shares, and when does that matter most?
Rounding down keeps the realised risk at or just below your intended amount; rounding up would breach it on every trade. The discarded fraction is trivial on a cheap stock but significant on an expensive one. If the formula returns 3.8 shares of a $900 stock, taking three means risking about 21 percent less than planned, which quietly reduces the return on a winning idea. Fractional-share brokers, or the exact unit figure shown for crypto and forex, remove the distortion. Otherwise, expect high-priced instruments to run systematically under your target risk.
References
Reviewed for accuracy by Daniel Agrici, Founder & Lead Developer · Editorial policy
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