About the Position Size Calculator
Position sizing is a core part of trading risk management. Instead of picking a share count by feel, you start with the maximum dollar amount you are prepared to lose on the trade and let the distance to your stop-loss determine the size.
This calculator works for long trades (stop below entry) and short trades (stop above entry). It is informational only and does not recommend any trade or risk level.
How It Works
First, your dollar risk is your account balance multiplied by your risk percentage. Next, risk per share is the distance between your entry price and your stop-loss. Dividing the dollar risk by the risk per share gives the number of shares.
With "Whole shares" selected, the result is rounded down so you never exceed your planned risk. The calculator also shows the total position value and warns you if that value is larger than your account balance, which would require margin.
Formula
Example
A trader with a $25,000 account decides to risk 1% on a trade, entering at $50 with a stop-loss at $48.
Inputs
- Account balance
- $25,000
- Risk per trade
- 1.00%
- Entry price
- $50.00
- Stop-loss
- $48.00
Results
- Dollar risk
- $250.00
- Risk per share
- $2.00
- Position size
- 125 shares
- Position value
- $6,250.00
If the stop-loss is hit, the loss is about $250 before commissions and slippage.
Understanding Your Results
- Position Size: The number of shares that matches your chosen risk.
- Dollar Risk: The maximum planned loss if the price reaches your stop-loss.
- Risk Per Share: How much you lose on each share between entry and stop.
- Total Position Value: Shares multiplied by entry price — the capital the trade requires.