Position Size Calculator

How the calculation works

This calculator converts a risk budget into a share (or unit) count. First it multiplies your account size by the percent you are willing to lose if the stop is hit. That dollar risk is then divided by the distance between entry and stop. The result is how many shares you can hold so that a stop-out costs about that risk amount — not more, not less.

Formula & example

Position size = (account × risk %) ÷ |entry − stop|

With a $10,000 account risking 1% (=$100), entry $50 and stop $48 (risk $2/share), size = $100 ÷ $2 = 50 shares.

Why use this calculator

A correct thesis with the wrong size can still damage the account. Fixed-fractional sizing keeps each loss similar in account terms so a string of losers stays survivable and comparable. Doing the division by hand under time pressure invites decimal errors; the calculator makes the rule mechanical.

When to use it

Use it after you know your invalidation price (the stop) and before you send the order. It applies to long or short ideas in stocks, ETFs, and — with the same math — other markets where risk is measured in price distance × size.

Background

Risking a fixed fraction of capital per trade is a long-standing money-management practice in speculative markets. It was popularized for retail traders in late-20th-century trading education (alongside related ideas such as Ralph Vince’s optimal f and Van Tharp’s position-sizing frameworks), as a simpler alternative to all-in bets or arbitrary share counts.

Tips for accurate results

• Use your real entry and stop — not round-number guesses.
• Include spread and fees mentally; round shares down against yourself.
• Recalculate if the stop distance changes.

FAQ