Position Size Calculator
Position sizing is the cornerstone of sound trading risk management. Rather than buying an arbitrary number of shares, a systematic position-sizing approach calculates exactly how many shares (or lots) to trade so that if your stop-loss is triggered, you lose only a predetermined percentage of your account equity. For example, with a $50,000 account and a 1% risk rule, you risk at most $500 per trade. If the stop is $2.00 per share below your entry, you buy 250 shares ($500 / $2.00). This approach keeps individual losses manageable and ensures no single bad trade causes serious damage to your portfolio. Enter your account size, maximum risk per trade, entry price, and stop-loss price to calculate the correct position size.
Position sizing formula
Dollar Risk = Account Equity x (Risk % / 100)
Risk per Share = Entry Price - Stop-Loss Price
Position Size = Dollar Risk / Risk per Share
Position Value = Position Size x Entry Price
For short positions, Risk per Share = Stop-Loss Price - Entry Price. Always round down to a whole number of shares.
Position sizing principles
- Never risk more than 2% of account equity on any single trade.
- Tighten your stop-loss to trade larger positions (with identical dollar risk).
- Account for slippage: your actual fill may be slightly worse than your stop-loss price.
- Adjust position size when trading correlated assets to avoid doubling effective risk.
- Review and recalculate after each significant change in account equity.
Position sizing: frequently asked questions
What is position sizing?
Position sizing determines how many shares, units, or lots to buy or sell in a single trade so that your maximum loss (if your stop-loss is hit) equals a fixed percentage of your account equity. It is one of the most important risk management techniques in trading.
What percentage of my account should I risk per trade?
Most professional traders risk between 0.5% and 2% of their account per trade. Risking more than 2% increases the chance of a significant drawdown from a run of losing trades. With 2% risk and a 50% win rate, you would need 35 consecutive losses to lose 50% of your account.
How does stop-loss distance affect position size?
The wider your stop-loss (in price terms), the smaller your position size must be to keep dollar risk constant. If you risk $500 per trade and your stop-loss is 50 cents away, you can trade 1,000 shares. If the stop is $2.00 away, you can only trade 250 shares.
Does this work for stocks, forex, and futures?
For stocks, position size is in shares. For forex, convert your dollar risk per pip to determine lot size using the pip value. For futures, risk per contract (point value x points risked) determines contract count. This calculator outputs shares (for stocks) from your inputs.
Should I always enter a full position at once?
Not necessarily. Some traders scale into positions, entering half at the initial signal and adding the remainder if price confirms the trade. Averaging into a position reduces the average entry price in your favour but requires careful position size adjustment to keep total risk within your limits.
Official sources
- FINRA: How to Manage Trading Risk.
- SEC Investor Education: Stocks - Introduction.
Reviewed by the CalculatorHub team, edited by James Graham, 14 June 2026. See our methodology.