Calculate the exact number of units, lots, or shares to trade based on your account balance, risk tolerance, and stop-loss distance. Essential for proper risk management.
How to Use the Position Size Calculator
- Enter your account balance. Include only the capital you're actively trading with.
- Set your risk percentage. Most professional traders risk 1-2% per trade. Never more than 5%.
- Enter your planned entry price. The price at which you intend to open the position.
- Enter your stop-loss price. The price at which you'll exit if the trade goes against you.
- Read the result. The calculator tells you exactly how many units to trade so that if the stop-loss hits, you only lose the percentage you specified.
The Position Sizing Formula
Position Size = (Account Balance × Risk %) ÷ (Entry Price − Stop Loss Price)
For example, with a $10,000 account, 1% risk, $100 entry, and $98 stop:
Position Size = ($10,000 × 0.01) ÷ ($100 − $98) = $100 ÷ $2 = 50 shares
Why Position Sizing Matters
Position sizing is the single most important risk management tool for traders. Even with a winning strategy, oversized positions can wipe out your account on a single losing trade. Proper sizing ensures:
- Survival. You can withstand a long losing streak without blowing up your account.
- Consistency. Each trade carries the same risk regardless of asset or volatility.
- Emotional control. Knowing your max loss in advance reduces panic-driven decisions.
- Compound growth. Smaller, controlled losses preserve capital for future winning trades.
Frequently Asked Questions
What is position sizing in trading?
Position sizing is the process of determining how many units, lots, or shares to trade for a given setup. It's calculated based on your account balance, the percentage you're willing to risk, and the distance from your entry to your stop-loss.
What is the 1% rule in trading?
The 1% rule states that you should never risk more than 1% of your trading account on a single trade. With a $10,000 account, that means a maximum loss of $100 per trade. This rule allows you to survive long losing streaks and protects against catastrophic loss.
How do I calculate position size for stocks?
For stocks: Position Size (shares) = (Account × Risk %) ÷ (Entry − Stop). Example: $10,000 × 1% = $100 risk. If entry is $50 and stop is $48, distance is $2. Position size = $100 ÷ $2 = 50 shares.
How do I calculate position size for forex?
For forex: First calculate pip value for your account currency, then divide your risk amount by (stop loss in pips × pip value). Use our
Pip Value Calculator to get the pip value for your pair.
Should I use 1%, 2%, or 5% risk per trade?
1% is the safest and most common for beginners and conservative traders. 2% is reasonable for experienced traders with a proven edge. 5% or higher is aggressive and only suitable for very small accounts or traders with exceptional win rates. Higher risk means faster account growth but also faster drawdowns.
Does this calculator work for crypto?
Yes. The position sizing formula is universal — it works for stocks, forex, crypto, commodities, and any other tradable asset. Just enter the entry price, stop-loss price, and your risk parameters in the same currency.