Work out how many shares to buy so that a stopped out trade costs you exactly the amount you planned to risk, and no more.
How it works
Position sizing starts from the loss you can accept, not from how many shares feel right. Decide what share of your account one losing trade may cost, often 0.5% to 2%, then let the distance to your stop set the size.
A tight stop allows more shares and a wide stop fewer, so every trade risks the same dollars whatever the setup. That keeps one bad trade from doing outsized damage.
Worked example
With a $25,000 account risking 1%, you can lose $250 on the trade. Buying at $50 with a stop at $47.50 risks $2.50 a share, so $250 ÷ $2.50 = 100 shares, a $5,000 position or 20% of the account.
Position Size questions
What percent of my account should I risk per trade?
Many traders keep it between 0.5% and 2%. At 1%, ten losing trades in a row still leave about 90% of the account, which leaves room to recover.
Does this work for short trades?
Yes. For a short, the stop sits above the entry and the calculator uses the distance between them, so the share count comes out the same way.
What if the position is bigger than my account?
That happens when the stop is very close to the entry. The calculator flags it; you would need margin, a wider stop with fewer shares, or a smaller risk %.
Should slippage or commissions change the size?
If your stop may fill a little worse than planned, add that gap to the risk per share. It lowers the share count slightly and keeps the real loss near your target.
For informational and educational purposes only. Not investment advice, and not a recommendation to buy or sell any security. Results are estimates from the numbers you enter.