Position Size Calculator
Work out how many shares to buy so that hitting your stop-loss costs a fixed percentage of your account, with the capital required shown alongside.
How to use this calculator
- 1Enter your account size and the percentage of it you are willing to lose on a single trade — most risk frameworks put this between 0.5% and 2%.
- 2Enter your intended entry price and the stop-loss price at which you would exit if wrong.
- 3Optionally add a target price to see the reward-to-risk ratio and the win rate the trade needs.
- 4Use the share count as a ceiling, and check the capital required — a tight stop can imply a position larger than the account can fund.
How the calculation works
Shares = (account × risk% − costs) ÷ |entry − stop|, rounded down- account × risk%
- The risk budget — the most you accept losing on this one trade
- |entry − stop|
- Risk per share: what one share loses if the stop is hit
- costs
- Brokerage on entry and exit, which is lost whether or not the stop triggers
The share count is always rounded down. Rounding up would exceed the risk budget, which is the single thing this calculation exists to prevent — a sizing rule that is only approximately respected is not a rule.
Capital required and capital at risk are different figures and confusing them is the most common sizing error. A tight stop permits a large position for a small risk; the position size may still exceed what the account can fund, which is a separate constraint and is flagged when it happens.
Costs are counted twice, because brokerage is paid entering and leaving regardless of the outcome. On small positions this materially reduces the share count the risk budget supports.
Worked example
1% of a 50,000 account, 5-point stop
- 1.Risk budget = 50,000 × 1% = 500.
- 2.Risk per share = 100 − 95 = 5.
- 3.Shares = 500 ÷ 5 = 100.
- 4.That position costs 100 × 100 = 10,000 — a fifth of the account — but only 500 is at risk, because the stop caps the loss.
- 5.With a target of 115 the reward is 15 a share against 5 of risk, a 3:1 ratio needing only a 25% win rate to break even.
Result: 100 shares — 10,000 committed, 500 at risk
A tighter stop allows a much bigger position
- 1.The same 500 risk budget, but risk per share is now only 1.
- 2.Shares = 500 ÷ 1 = 500, requiring 50,000 of capital — the entire account.
- 3.The risk is unchanged at 500, but the position now needs every unit of available capital, so account size rather than the risk rule becomes the binding constraint.
Result: 500 shares — the same 500 risk, but the full account committed
Sizing is the part of trading that is actually arithmetic
Most of what is discussed about trading — which instrument, which direction, when — is judgement, and no calculator improves it. Position sizing is different. Once an entry and a stop-loss are chosen, the number of shares that keeps the loss within a stated budget is a matter of division, and getting it wrong is the most reliably fatal error in the activity.
The rule inverts the usual order of thinking. Rather than deciding how much to buy and then discovering what a bad outcome costs, you decide what a bad outcome may cost and let that determine how much to buy. The consequence is that position size varies trade to trade: a wide stop produces a small position and a tight stop a large one, with the loss on either identical if the stop is hit.
Capital committed is not capital at risk
These two figures routinely get confused, and the confusion runs in both directions. Someone who buys 10,000 of a share with a stop 5% below entry has committed 10,000 but risks about 500. Someone who reasons that a 10,000 position is "a fifth of my account, so I am risking 20%" has misunderstood what the stop does.
The opposite error is more dangerous. A very tight stop makes the risk budget support an enormous position — the second worked example turns a 500 risk into a 50,000 position — and it is easy to treat the resulting share count as permission rather than as a ceiling. Two things break at that size. The capital may simply not be available. And the assumption underpinning the whole calculation, that you exit at your stop, becomes least reliable exactly where the position is largest: a gap through a tight stop on an oversized position produces a loss far beyond the budget.
Why the percentage chosen matters so much
The risk percentage per trade is the parameter that determines whether an account survives a bad run, and losing streaks are far more ordinary than they feel. A strategy that wins 50% of the time produces a run of eight consecutive losses reasonably often over a few hundred trades.
- At 1% per trade — ten consecutive losses cost about 9.6% of the account. Uncomfortable, entirely survivable, and recoverable with normal returns.
- At 5% per trade — the same ten losses cost about 40%. Recovering from that requires a 67% gain, and the psychological pressure at that point tends to produce worse decisions rather than better ones.
- At 10% per trade — ten losses cost about 65%, needing a 186% gain to recover. Few accounts and fewer people come back from that.
- The asymmetry is the point — losses and the gains needed to recover them are not symmetric, and the gap widens sharply as the loss deepens. This is why conventional risk frameworks cluster at 1–2% rather than at a figure that sounds bolder.
What this calculation cannot protect you from
The arithmetic assumes the stop is honoured at the stated price, and there are well-understood circumstances where it is not. A market that gaps overnight — on an earnings release, a regulatory announcement, an event while the exchange is closed — reopens beyond the stop, and a stop order becomes a market order filled at whatever price exists. The realised loss can be several times the budgeted one.
Correlation defeats it differently. Six positions each risking 1% look like 6% of exposure, but if all six are in the same sector responding to the same driver, they are closer to one 6% position that happens to be spread across six tickers. Sizing each trade correctly in isolation does not produce a correctly sized portfolio, and this calculator — which sees one trade at a time — cannot see that. The honest reading is that position sizing bounds one specific, common failure mode very well, and leaves others entirely untouched.
What this assumes, and where it stops
Assumptions
- The stop-loss is executed at the stated price. Gaps and illiquidity can produce a materially worse fill.
- The whole position is entered at one price and exited at one price.
- Costs are charged once on entry and once on exit at the amount entered.
- The trade is considered in isolation, with no account taken of correlation with positions already held.
Limitations
- Gap risk is not modelled. A market that reopens beyond the stop can produce a loss several times the budgeted amount.
- Correlated positions each sized at 1% are not collectively a 1% risk — sizing one trade correctly does not size a portfolio.
- Leverage, margin requirements and overnight financing costs are not included.
- This sizes risk. It says nothing about whether a trade is worth taking, and no position size makes a poor strategy profitable.
Common questions
What percentage should I risk per trade?
Conventional risk frameworks cluster between 0.5% and 2%, and the reason is the arithmetic of recovery rather than timidity. At 1% per trade, ten consecutive losses cost about 9.6% of the account and are straightforwardly recoverable. At 5% the same streak costs about 40%, which requires a 67% gain to undo. Losing streaks of eight or more are ordinary for any strategy winning around half its trades, so the figure has to be survivable rather than merely comfortable on a good day.
Why does the calculator say I need more capital than my account holds?
Because a tight stop makes a small risk budget support a very large position. Risking 500 with a one-point stop implies 500 shares, which at 100 a share needs 50,000 of capital. The risk is genuinely only 500, but you still have to fund the position. When that happens, account size rather than the risk rule is the binding constraint, and the answer is to take a smaller position — not to reach for leverage to fund the full one.
What is the difference between capital committed and capital at risk?
Capital committed is what the position costs to open — shares multiplied by entry price. Capital at risk is what you lose if the stop is hit — shares multiplied by the distance from entry to stop, plus costs. A 10,000 position with a stop 5% below entry commits 10,000 and risks about 500. Confusing the two leads either to needless caution or, more dangerously, to treating an oversized position as safe because the calculated risk figure looks small.
Does a stop-loss guarantee my loss is limited?
No, and this is the most important caveat on the whole calculation. A stop triggers an order when the price is reached, but the fill happens at whatever price is actually available. If a market gaps — over a weekend, on an earnings release, after a regulatory announcement — it can reopen well beyond your stop and fill far worse. The loss is then several times the budget. This is precisely why very tight stops on very large positions are more fragile than the arithmetic suggests.
Sources
- Stop-Loss Orders — US Securities and Exchange Commission (Investor.gov)
- Day Trading: Your Dollars at Risk — US Securities and Exchange Commission
Formula and content last reviewed on .
Results are estimates for information only, not professional advice.
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