Position size calculator
Most traders pick a share count by feel and only then look at what could go wrong. This calculator works the other way round. You decide what a losing trade may cost, and the distance to your stop sets the size.
Shares to trade
100
Long trade
- Position value
- $5,000.00
- 20% of the account
- Risk budget
- $250.00
- Loss if stopped
- $250.00
- After rounding down to whole shares
- Risk per share
- $2.50
- Reward to risk
- 3 to 1
For education only, not investment advice. Results are estimates based on what you enter, and they leave out anything not shown, such as slippage and most taxes. Check the numbers with your broker or a licensed professional before acting on them.
The formula
- Risk budget
- account size x risk per trade %
- Risk per share
- |entry price - stop price|
- Shares
- risk budget / risk per share, rounded down
Worked example
You have a $25,000 account and accept losing 1% on any one trade. You want to buy at $50 with a stop at $47.50.
- Risk budget: $25,000 x 1% = $250.00
- Risk per share: $50.00 - $47.50 = $2.50
- Shares: $250.00 / $2.50 = 100
You would buy 100 shares, a $5,000.00 position. That is 20% of the account, yet a hit on the stop costs only 1% of it. With a $57.50 target the trade offers 3 to 1 reward to risk.
Why the stop decides the size
Two trades of the same dollar size can carry very different risk. A $5,000 position with a stop 2% away risks $100. The same position with a stop 20% away risks $1,000. Sizing from the stop keeps the loss the same whichever chart you are trading, so a volatile small cap simply gets fewer shares than a slow large cap.
Pick the stop first, from where the trade idea is wrong on the chart or the news. Moving a stop closer just to fit more shares raises the chance of being stopped out by ordinary noise.
What this does not protect you from
The result assumes you get out at your stop. Stocks can open far past a stop after earnings, an FDA decision or an offering, and thinly traded names can slip through it during the day. If a stock has a known event coming, consider sizing smaller than the number here.
Frequently asked questions
How much should I risk per trade?
Many educational sources use 1% to 2% of the account as a starting point, but no percentage is right for everyone. A smaller figure means a losing streak does less damage. Ten straight losses at 1% leave about 90% of the account, while ten at 5% leave about 60%.
Does it work for short selling?
Yes. Enter a stop above your entry and the calculator treats the trade as a short. The share count comes out the same way, although a short can lose more than planned if the stock gaps up through the stop.
Why does it say the position is larger than my account?
A tight stop can produce a share count you cannot pay for in cash. In that case you are limited by buying power rather than risk. Taking the smaller cash size simply means risking less than your budget.
Why does it round down?
Rounding down keeps the loss at or under your budget. Not every broker accepts stop orders on fractional shares, so whole shares are the safer assumption.