How is the position size calculated?

Risk per share = entry price minus stop-loss price (for a long). Total risk allowed = account size times risk-per-trade fraction. Shares = total risk allowed divided by risk per share. Position value = shares times entry price. The calculator does this rounding and sanity-checks the result against the account size.

What risk-per-trade percentage should I use?

For most retail traders, 1-2% per trade is the standard rule. At 2%, you can survive a streak of 10 consecutive losses with only a 20% drawdown. At 5%, the same streak draws you down 40%. Anything above 5% per trade significantly increases your probability of catastrophic loss. Professional discretionary traders typically run 0.5-1.5%; systematic traders running many simultaneous bets often run 0.25-1% per bet.

What does the "2R target" mean?

R is the dollar amount you risk on a trade (1R = the distance from entry to stop, in dollars). 2R is twice that distance. The 2R target is the price at which you would have made twice what you risked. Many traders manage trades by R-multiples: take half off at 1R, let the rest run to 2R or 3R. It standardizes how you compare trade quality regardless of position size or stop distance.

What if my position size exceeds my account?

If the calculated position value is larger than your account, you are using a stop-loss too tight relative to the risk you are willing to take. Either widen the stop, accept a smaller risk-per-trade fraction, or pass on the trade. With cash accounts (no leverage), you cannot buy more than you have; with margin, you can but should not — leverage multiplies position-sizing mistakes.

Does this calculator work for shorts?

Yes. For a short, the stop-loss is above the entry price. The calculator uses the absolute value of (entry minus stop) for risk-per-share, so it produces the correct number of shares regardless of direction. Just enter your actual entry and your actual stop.

How does this differ from the Kelly criterion?

A position-size calculator says "given that I want to risk X% of account per trade, here is how many shares to buy." It does not tell you what X% should be. The Kelly criterion answers that other question: given your edge and win/loss profile, what fraction of bankroll is optimal? Most traders use Kelly to determine the risk percentage, then this calculator to translate that into shares.

Should I count commissions?

For US equities at most retail brokers, commissions are zero, so it does not matter. For options or for brokers that still charge commissions, add the round-trip commission to your risk-per-share. For futures, commissions can be a meaningful part of the risk on small positions.

Slippage is the difference between the price you intend to enter or exit and the price you actually get. For liquid stocks, it is usually negligible. For thin stocks or on stop-loss exits during fast moves, slippage can be 0.5-2% beyond your stop. Conservative traders pad their stop distance by their expected slippage when sizing.

Is this calculator free?

Yes. Free for unlimited human use; backed by the QuantOracle API which provides 1,000 free calls per IP per day with no signup or API key.

Position Size Calculator

Get the exact number of shares to buy so a single bad trade can only lose your chosen risk-per-trade fraction. Works for longs and shorts, stocks and crypto.

Results

long · $100,000 account · 2.00% risk · $50 entry · $48 stop

Buy

1,000 shares

position value $50,000.00

Max loss at stop

-$2,000.00

50.00% of account

Risk / share

$2.00

2R target price

$54.00

Shares × entry

$50000

Computed in 7 ms.

What does this mean?

For a long entry at $50 with a stop at $48 (4.00% from entry), risking 2.00% of a $100,000 account, you should buy 1,000 shares. Worst-case loss at the stop is $2000.00. If the trade reaches your 2R target at $54.00, your gain is twice the dollar risk.

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Frequently asked questions

Position sizing is the discipline of deciding how many shares (or contracts, or units) to buy on each trade so that a single bad outcome cannot blow up your account. The most common rule is "risk a fixed fraction of account on each trade" — typically 1-2% — and let the stop-loss distance dictate the share count. This calculator implements that rule.

The fixed-fractional rule

Position sizing is the discipline that separates traders who survive losing streaks from traders who do not. The simplest sustainable rule is fixed-fractional risk per trade: pick a small percentage of your account that you are willing to lose on any single trade — typically 1-2% — and let your stop-loss distance determine how many shares to buy.

With 2% per trade, a streak of 10 consecutive losses leaves you down about 18%. With 5%, the same streak draws you down 40%. With 10%, 65%. The math is unforgiving on the high end: per-trade risk and drawdown grow geometrically, not linearly.

Why this rule beats the alternatives

New traders often size by gut, by "buy a round lot," or by "use all available margin." All three guarantee that your worst trade roughly equals your biggest position, which means a single fat-finger or a single fast-market gap can take out your account. Fixed-fractional sizing decouples the size of any single bet from the size of the worst possible outcome.

Tightening or loosening the stop

Notice how the stop distance interacts with the position size. If you cut your stop in half, you can buy twice as many shares for the same dollar risk — but you double your chances of getting stopped out by routine noise. If you widen the stop, you buy fewer shares but tolerate more wiggle. The right stop comes from the trade thesis (volatility, support/resistance, average true range), not from how big a position you want.

R-multiples and trade evaluation

Many traders track outcomes in R-multiples — the ratio of profit (or loss) to the dollar amount risked. A trade that hits 2R is "a 2R win." A losing trade that gets out at the stop is "a -1R loss." This standardization lets you compare trade quality across positions of different sizes. A profitable trader generally has an average R per trade above zero — even if their win rate is below 50%, the size of their wins relative to their losses keeps the expectancy positive.

Combining with Kelly

This calculator answers "given that I want to risk X% of account per trade, how many shares?" It does not tell you what X% should be. For that, see the Kelly criterion calculator — it derives the optimal X% from your edge and win/loss profile.

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