Position Size Calculator
Quickly compute position size with accurate formulas. See amortization schedules, growth projections, and side-by-side comparisons.
Reviewed by Daniel Agrici, Founder & Lead Developer
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\nRisk per share = $175 - $170 = $5\nShares = $250 / $5 = 50 shares\nPosition value = 50 × $175 = $8,750 (35% of account)\nMax 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\nRisk per unit = $67,000 - $65,000 = $2,000\nPosition = $100 / $2,000 = 0.05 BTC\nPosition value = 0.05 × $65,000 = $3,250\nMax 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.
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.
References
Reviewed by Daniel Agrici, Founder & Lead Developer · Editorial policy