Position Size Calculator.
Let the stop set the size.
Most people pick a round number of shares and find out what it risks afterwards. This works the other way round: decide what you can afford to lose, and the share count falls out of it. Do this before you average down, not after.
Position Size Calculator
Size the trade from the loss you can afford
Your Risk
Ready to calculate
Enter your account, the risk you accept, and where your stop goes
How the formula works
Two numbers you choose, one the market gives you
Position sizing is the part of risk management that people skip, and it is the part that decides whether a bad run is survivable. The order of operations matters: you do not decide to buy 100 shares and then work out what that risks. You decide what you can afford to lose, work out what one share loses if you are wrong, and divide. It is the same discipline that should be applied before you average down on a position, where the temptation to size by feel is strongest.
Formula
Shares = (Account × Risk %) ÷ (Entry Price − Stop Price)Notice which inputs are yours and which are not. The account size and the risk percentage are entirely your choice. The gap between entry and stop is not — it is set by where the stock's structure says your thesis fails. That is why the share count is an output. Moving the stop closer to make the position bigger is not risk management, it is the same trade with a worse exit.
A worked example
And what happens when the stop moves
A $25,000 account, risking 1% per trade. The stock is at $48 and the nearest sensible support sits at $44.
- Risk budget = $25,000 × 1% = $250
- Risk per share = $48 − $44 = $4
- Shares = $250 ÷ $4 = 62.5, rounded down to 62
- Position value = 62 × $48 = $2,976, which is 11.9% of the account
- If the stop is hit: 62 × $4 = $248 lost — inside the $250 budget
Now move the stop to $40 because the chart is choppier than it looked. Risk per share doubles to $8, so the position halves to 31 shares and $1,488. Same account, same risk tolerance, same stock, half the size. A wider stop is not free — it is paid for in position size, which is exactly the trade-off that should be made deliberately rather than discovered later.
This is also why the method quietly enforces diversification. At 1% risk with typical stop distances, most positions land somewhere between 5% and 15% of the account, which makes a dangerously concentrated portfolio hard to build by accident.
The 1% rule
Why the number is small on purpose
The 1% rule says risk no more than one percent of the account on any single trade. It sounds timid until you look at what happens over a losing streak, which every strategy has.
| Risk per trade | After 10 straight losses | Gain needed to recover |
|---|---|---|
| 1% | −9.6% | 10.6% |
| 2% | −18.3% | 22.4% |
| 5% | −40.1% | 67.0% |
| 10% | −65.1% | 186.8% |
Ten losses in a row is not a catastrophe scenario — it is an ordinary run for a strategy that wins half the time. At 1% risk it costs under 10% and you carry on. At 10% risk the same run takes nearly two-thirds of the account and needs a near-tripling to undo. The rule is not about timidity; it is about staying in the game long enough for an edge to show up.
When the answer looks wrong
Two outputs that surprise people, and what each means
The position is bigger than my account
A very tight stop makes each share cheap in risk terms, so the budget stretches to a share count you cannot fund. Nothing is wrong with the calculation — the trade simply needs more capital than you have. Buy what you can afford and accept less risk than budgeted. Reaching for margin to close the gap defeats the exercise, because leverage removes exactly the staying power this method exists to protect.
It says zero shares
One share would lose more than your whole risk budget. The stop is too wide, the stock is too expensive, or the account is too small for this particular trade. There is no correct size, so the correct action is not to take it — or to find a tighter, still-honest stop. A calculator that returned “1 share” here would be telling you a comfortable lie.
Sizing before you average down
The step that keeps a ladder from becoming a spiral
Averaging down and position sizing are usually treated as separate topics, which is precisely how averaging-down plans go wrong. If you size the first entry as though it were the whole position and then add to it twice, you did not average down into a planned position — you tripled an unplanned one.
The fix is to size the total intended position here first, including every tranche you might add, and treat that as a hard cap. Then split it: a larger first tranche, smaller additions at pre-set levels, and nothing beyond the cap regardless of how cheap the stock gets.
Once the budget is set, the average down calculator tells you what each tranche does to your average cost, and the averaging down strategy planner models the full ladder with the cap enforced. When not to average down covers the cases where the right size is zero.
Frequently asked questions
What is position sizing and why does it matter?▾
Position sizing decides how much of your capital goes into one trade. It matters more than entry timing because it is the only variable that determines how much a single wrong call can cost you. Two investors can take exactly the same trades and end the year in completely different places purely on the basis of how large each position was.
What is the position size formula?▾
Shares = (account size x risk percentage) / (entry price - stop-loss price), rounded down. The numerator is the cash you are willing to lose on this trade; the denominator is what one share loses if the stop is hit. A $25,000 account risking 1% is a $250 budget; a $48 entry with a $44 stop risks $4 a share; $250 / $4 = 62 shares.
What is the 1% rule in trading?▾
It is the convention of risking no more than 1% of your account on any single trade. On a $25,000 account that is $250 - not $250 invested, but $250 lost if the stop is hit. The point is survivability: at 1% risk, ten consecutive losses cost you under 10% of the account, which is a bad month rather than an unrecoverable one.
Should I use 1% or 2% risk per trade?▾
It depends on how often you trade and how much of your net worth this account represents. Frequent traders and anyone whose account is a significant share of their savings should sit at or below 1%. Two percent is defensible for a small, deliberately speculative account with few positions. Above 2%, a normal losing streak starts doing damage that a normal winning streak cannot repair.
Why does the calculator round the share count down?▾
Because rounding up breaches the risk budget you just set. If 62.4 shares fit inside your $250 of risk, buying 63 puts you over it. The overshoot on a single trade is trivial; the habit of rounding up on every trade is how a 1% risk framework quietly becomes a 1.3% one.
What does it mean when the calculator says zero shares?▾
It means one share would lose more than your entire risk budget - the stop is too wide, the stock is too expensive, or the account is too small for this trade. There is no way to size it correctly, so the honest answer is that this trade is not available to you at this risk level. Tighten the stop, find a cheaper instrument, or skip it.
Why is my position larger than my account?▾
A very tight stop makes each share cheap in risk terms, so the risk budget stretches to a share count you cannot actually fund. The risk maths is correct; the trade just needs more capital than you have. Buy what you can afford and accept less risk than budgeted, or widen the stop. Do not reach for margin to close the gap - leverage removes the ability to sit through a drawdown, which is the thing this method exists to protect.
How does position sizing interact with averaging down?▾
Directly, and this is where most averaging-down plans fail. Your position size should be set against the full planned position including every tranche you might add - not against the first buy alone. Size the initial entry as if you will use the whole budget, cap the total in advance, and then the additions stay inside a limit you chose while calm.
Does this work for ETFs, forex and crypto?▾
The method is universal: risk budget divided by per-unit risk. For ETFs it works unchanged. For crypto you can hold fractional units, so the rounding-down step matters less. Forex adds pip values and lot sizes, so the arithmetic needs one more conversion step, but the logic is identical.
Should the stop-loss be a percentage or a technical level?▾
A technical level, wherever you can find one. A stop at a round percentage below entry is placed where your spreadsheet says rather than where the stock's behaviour says, which is why such stops get hit by ordinary volatility. Put the stop where your thesis would be proven wrong - below a support level or a prior low - and then let this calculator work out the size that distance allows.
Related tools and guides
Disclaimer: This calculator is for educational purposes only and is not financial advice. It sizes a position against a stop-loss you supply; it cannot guarantee that a stop executes at your price, which gaps and illiquid markets can prevent. Consult a qualified adviser before making investment decisions.