Position Size: formula
Position Size: worked example
| Account size | $25,000 |
|---|---|
| Risk per trade | 1.0% |
| Entry price | $50 |
| Stop-loss price | $48 |
| Shares to buy | 100 |
| Position value | $5,000 |
| Dollars at risk | $250 |
FINRA warns that stop prices are not guaranteed execution prices. A gap or fast market can produce a worse exit, and fees add costs. The arithmetic excludes those effects and does not establish maximum realized loss, buying power, short-sale exposure or margin eligibility.
Position Size: changing Account size
| Account size | Shares to buy | Position value | Dollars at risk |
|---|---|---|---|
| $20,000 | 80 | $4,000 | $200 |
| $22,500 | 90 | $4,500 | $225 |
| $25,000 (example) | 100 | $5,000 | $250 |
| $27,500 | 110 | $5,500 | $275 |
| $30,000 | 120 | $6,000 | $300 |
Position Size: compare input ranges
| Input | Tested from | To | Shares to buy: low input | Shares to buy: high input | Swing |
|---|---|---|---|---|---|
| Entry price | $45 | $55 | 0 | 33 | 33 (33%) |
| Stop-loss price | $43 | $52 | 35 | 0 | 35 (35%) |
| Risk per trade | 0.750% | 1.3% | 75 | 125 | 50 (50%) |
| Account size | $22,500 | $27,500 | 90 | 110 | 20 (20%) |
Position Size: individual input comparisons
| Input | Value | Shares to buy | Position value | Dollars at risk |
|---|---|---|---|---|
| Account size | $20,000 | 80 | $4,000 | $200 |
| $22,500 | 90 | $4,500 | $225 | |
| $25,000 | 100 | $5,000 | $250 | |
| $27,500 | 110 | $5,500 | $275 | |
| $30,000 | 120 | $6,000 | $300 | |
| Risk per trade | 0.500% | 50 | $2,500 | $125 |
| 0.750% | 75 | $3,750 | $188 | |
| 1.0% | 100 | $5,000 | $250 | |
| 1.3% | 125 | $6,250 | $313 | |
| 1.5% | 150 | $7,500 | $375 | |
| Entry price | $40 | 0 | $0.00 | $0.00 |
| $45 | 0 | $0.00 | $0.00 | |
| $50 | 100 | $5,000 | $250 | |
| $55 | 33 | $1,815 | $248 | |
| $60 | 20 | $1,200 | $250 | |
| Stop-loss price | $38 | 20 | $1,000 | $240 |
| $43 | 35 | $1,750 | $245 | |
| $48 | 125 | $6,250 | $250 | |
| $52 | 0 | $0.00 | $0.00 | |
| $57 | 0 | $0.00 | $0.00 |
Position Size: combined input changes
| Account size / Risk per trade | 0.500% | 1.0% | 1.5% |
|---|---|---|---|
| $20,000 | 40 | 80 | 120 |
| $22,500 | 45 | 90 | 135 |
| $25,000 | 50 | 100 | 150 |
| $27,500 | 55 | 110 | 165 |
| $30,000 | 60 | 120 | 180 |
Position Size: which assumptions move the result?
Position Size: values and definitions
| Quantity and definition | Value used |
|---|---|
| Account size | $25,000 |
| Risk per trade — The share of the account you accept losing if the stop is hit. | 1.0% |
| Entry price | $50 |
| Stop-loss price — Below the entry for a long position. | $48 |
| Shares to buy | 100 |
| Position value | $5,000 |
| Dollars at risk | $250 |
Position Size: half and double Entry price
| Entry price | Shares to buy |
|---|---|
| $25 | 0 |
| $50 | 100 |
| $100 | 4 |
Use account equity, an explicitly chosen risk-budget percentage, and the modeled entry and exit prices. For this long-position calculation, exit must be below entry and both prices positive. A chosen percentage does not establish a suitable risk level, and the tool does not select an order or trade.
Common error: Sizing by the dollars you want to invest. That fixes the position and leaves the risk to chance, so a wide stop can cost far more than you meant to lose.
Investing & Returns calculators: Risk Reward Ratio Calculator, Kelly Criterion Calculator, Net Present Value (NPV) Calculator, Continuous Compounding Calculator, Compound Interest & Future Value Calculator, Investment Return Calculator.
Position sizing works backward from the loss you can accept. With a $25,000 account and a 1 percent risk rule, you can lose $250 on the trade. If the entry is $50 and the stop is $47.50, each share risks $2.50, so the position is 100 shares, worth $5,000.
A wider stop means fewer shares for the same dollar risk, which is the point of doing it this way.
Use a stop price that the chart or the plan justifies, not one picked to make the share count look big. The stop distance drives everything.
Judge whether the trade is worth taking with the risk-reward ratio calculator, and size it against your edge with the Kelly criterion page. The stock profit calculator tallies results, and the maximum drawdown page shows the cost of a losing streak.
Does 100 shares mean I must invest all available cash?
No. At the assumed $50 entry it uses $5,000. Buying power and concentration limits remain separate.
How much should I risk per trade?
The risk percentage is a chosen scenario input, not an established safe allocation. Translate it into money and compare that planned loss with the account’s ability to absorb it. A stop order cannot guarantee an execution price, especially across a gap or in an illiquid market.
What if the stock gaps below my stop?
The order may fill at a worse price than your stop, so the loss exceeds the plan. Position sizing limits the damage but cannot remove gap risk.
Should position size depend on conviction?
Some traders scale size with confidence, but a consistent risk rule prevents oversized bets from a moment of overconfidence.