Position Size Calculator
Calculate exactly how many shares or contracts to buy. Enter your account size, how much you are willing to risk, and your stop loss level.
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Position sizing determines how many shares or contracts you should trade based on a fixed risk amount. Instead of guessing, you use a simple formula to ensure every trade follows the same risk rules.
Position Size = Dollar Risk / (Entry Price − Stop Loss)
Where Dollar Risk equals your account size multiplied by your risk percentage. If you have a $50,000 account and risk 1% per trade, your dollar risk is $500.
Example:
Account: $50,000 | Risk: 1% ($500) | Entry: $150.00 | Stop Loss: $147.00
Risk per share: $150.00 − $147.00 = $3.00
Position size: $500 / $3.00 = 166 shares ($24,900 position)
Why Position Sizing Matters
Without consistent position sizing, a single bad trade can wipe out weeks of gains. The math is straightforward: if you risk 10% of your account and lose three trades in a row, you have lost 27% of your capital. At 1% risk, that same streak costs you just 2.97%.
- Protects against ruin: Fixed-percentage risk keeps you in the game during drawdowns.
- Removes emotion: Your position size is calculated, not guessed. No oversizing on "high conviction" trades.
- Scales with your account: As your account grows, your position sizes grow proportionally. As it shrinks, they shrink.
Common Risk Percentages
Most traders use between 0.5% and 2% of their account per trade. Here is a general guideline:
- 0.5%: Conservative. Suitable for beginners or high-frequency strategies with many trades per day.
- 1%: The most common choice among experienced traders. Balances growth with capital protection.
- 2%: Aggressive. Used by traders with a proven edge and high win rate. Not recommended for beginners.
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Frequently Asked Questions
What is position sizing in trading?
Position sizing is the process of determining how many shares or contracts to buy or sell on a trade. It ensures you never risk more than a set percentage of your account on any single trade, which is essential for long-term survival in the markets.
How much should I risk per trade?
Most professional traders risk between 0.5% and 2% of their account per trade. Beginners are often advised to start at 0.5% to 1%. The exact amount depends on your strategy, win rate, and risk tolerance.
Does this calculator work for options and forex?
Yes. The formula works for any market. For options, use the option premium as your entry price. For forex, enter the pip value and lot size equivalent. The underlying math (dollar risk divided by per-unit risk) applies universally.
What is the 1% rule in trading?
The 1% rule means you never risk more than 1% of your total account balance on a single trade. On a $50,000 account, that means your maximum loss per trade would be $500. This rule helps protect your capital during losing streaks.