Position Size Calculator

Position sizing determines the exact number of shares, contracts, or lots to trade on each entry, based on your account size, risk tolerance per trade, and the distance to your stop-loss. Proper position sizing is what separates disciplined risk management from gambling.

Fixed Risk (Percentage Risk) method: Shares = (Account Size × Risk % per Trade) ÷ (Entry Price − Stop-Loss Price)

Where:

• Account Size: total trading capital
• Risk % per Trade: typically 0.5–2% of account per trade (professional standard: 1%)
• Entry Price − Stop-Loss: the dollar risk per share; also called the “stop distance”

Kelly Criterion formula: f = (bp − q) ÷ b*

Where:

• f* = fraction of account to risk
• b = net odds received per trade (average win ÷ average loss)
• p = probability of winning
• q = probability of losing = 1 − p

The Kelly criterion gives the mathematically optimal bet size to maximize long-run account growth. In practice, traders use Half Kelly or Quarter Kelly to reduce volatility.

What each variable means:

• R-multiple: your risk unit; 1R = your fixed dollar risk on the trade. A 2R winner pays twice your risk. A −1R loser costs exactly your planned risk.
• Risk per trade (%): at 1%, you need 100 consecutive total losses to lose all capital; at 10%, just 10 losses wipes you out
• Position size in dollars = Shares × Entry Price
• Leverage: using margin, your position size can exceed account equity; this amplifies both gains and losses proportionally

Reference: account survival by risk per trade

• 0.5% risk/trade: 99.5% of capital remains after 1 loss; 10 losses → 95.1% remaining
• 1.0% risk/trade: 99.0% after 1 loss; 10 losses → 90.4% remaining
• 2.0% risk/trade: 98.0% after 1 loss; 10 losses → 81.7% remaining
• 5.0% risk/trade: 95.0% after 1 loss; 10 losses → 59.9% remaining

Worked example — Fixed Risk method: Account: $25,000. Risk: 1% = $250 per trade. Stock: Entry at $85.00, stop-loss at $81.50. Stop distance = $3.50/share.

Shares = $250 ÷ $3.50 = 71.4 → 71 shares Position value = 71 × $85.00 = $6,035 (24.1% of account in one trade) Maximum loss if stopped out = 71 × $3.50 = $248.50 (slightly under the $250 target — correct rounding direction)

Kelly check: Win rate 55%, avg win $350, avg loss $175. b = 350/175 = 2.0. f* = (2.0 × 0.55 − 0.45) ÷ 2.0 = (1.10 − 0.45) ÷ 2.0 = 0.65 ÷ 2 = 32.5% — Full Kelly. Use Half Kelly = 16.25% of account → $4,063 position size. More conservative than the 1% method here.