Position Size Calculator

How position sizing works

Position size is the number of shares you buy on a trade. It is not driven by how confident you feel or how much the stock can move. It is driven by two numbers you control before the trade: the most you are willing to lose, and the distance from your entry to your stop loss.

The formula:

• Risk dollars = Account size × Risk percent (for example, 1% of $25,000 = $250)
• Risk per share = Entry price minus Stop loss price (or vice versa for shorts)
• Shares = Risk dollars ÷ Risk per share

If your stop is wider, your position is smaller. If your stop is tighter, your position is larger. The dollar amount you put at risk stays constant. That is the point.

Why this matters more than the entry

New traders obsess over the entry price and ignore the size. Experienced traders run it the other way around. Sizing is the only variable that decides whether one bad trade ends your account or barely shows up on your P&L.

A common rule: risk 1% of your account per trade. At 1% risk, you would need to lose 100 trades in a row to be wiped out. Most strategies, even bad ones, do not lose 100 in a row. Most traders blow up not because they pick the wrong setups, but because they size individual trades 5% to 20% of the account when they feel certain, and one of those convictions is wrong.

Position sizing is a behavioral discipline. The math is trivial. The hard part is doing it consistently when a setup looks obvious or when you are trying to make back a loss.

Common mistakes

• Sizing up after losses. Doubling position size to recover a loss turns a 1% mistake into a 2% mistake. The "revenge trade" pattern is one of the most costly behaviors traders carry, and the math compounds against you fast.
• Ignoring the stop. If you do not have a stop, you do not have a position size. Without a stop, "risk per share" is unbounded, and the formula above breaks. Set the stop first, then size the trade.
• Sizing by gut. "This setup is so clean, I'll go bigger" is the language of a soon-to-be-smaller account. The market does not care how clean the setup looks.