Position Size Calculator
Professionals don't ask "how many shares can I afford?" — they ask "how many dollars am I willing to lose?" Set your risk per trade and let the math size the position: a stopped-out trade costs exactly what you chose, no more.
Your inputs
What the trade looks like
| Scenario | Share price | Position value | P&L |
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The 1% rule, in one paragraph
Risk a fixed fraction of your account per trade — 1% is the classic starting point, 2% the common ceiling. A $25,000 account risking 1% puts $250 on the line. Ten consecutive losers still leaves ~90% of the account intact. The same streak at 10% risk per trade leaves you down 65% and psychologically broken. Survival is the strategy; the edge comes later.
The math: stop distance sets size, risk % sets dollars
Two separate decisions: how many dollars you'll lose (account × risk %) and where you're wrong (entry − stop). The share count is just the ratio: risk dollars ÷ risk per share, rounded down so the actual risk never exceeds your limit. A wider stop doesn't mean more risk — it means fewer shares for the same dollars.
Shares = ⌊ risk $ ÷ (entry − stop) ⌋
Position value = shares × entry
Worked example
$25,000 account, 1% risk, entry $100, stop $95. Risk = $250. Risk per share = $5. Shares = ⌊250 ÷ 5⌋ = 50. Position value = $5,000 — 20% of the account, but only $250 is actually at risk if the stop triggers. Widen the stop to $90 and the same $250 buys just 25 shares.
Caveats worth knowing
- Gaps happen. A stop-loss is not a guarantee — overnight gaps and fast markets can fill you below the stop. Size as if the stop might slip.
- Commissions add up. Frequent small trades bleed via fees; the stock profit calculator shows the true cost.
- Correlated positions stack risk. Five 1%-risk trades in the same sector is not 1% risk — it's one big 5% bet wearing a disguise.