Calculate optimal stock position sizes based on your risk tolerance, account size, and stop-loss strategy. The secret weapon professional traders use to protect their capital.
Determine the optimal number of shares to buy based on your risk parameters
Enter your account value, risk tolerance, and stock information to calculate the optimal position size. All calculations are performed locally in your browser — your data remains private.
100% Free • No signup required • Instant results
Professional traders know that position sizing is one of the most critical aspects of successful trading
Properly sized positions ensure that no single trade can significantly damage your portfolio, allowing you to stay in the game even during drawdowns.
A systematic approach to position sizing creates consistency in your trading, reducing emotional decisions and promoting disciplined investing.
Optimal position sizing helps preserve capital during drawdowns while allowing your account to grow exponentially during winning periods.
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Different approaches professional traders use to size their positions
There are several approaches to position sizing, each with its own strengths. Our calculator focuses on the fixed percentage risk method, which is widely regarded as one of the most effective approaches.
| Method | Description | Best For |
|---|---|---|
| Fixed Dollar Amount | Invest the same dollar amount in each position | Beginners, small accounts |
| Fixed Percentage | Invest the same percentage of account in each position | Long-term investors |
| Fixed Risk Percentage | Risk the same percentage of account on each trade | Active traders, professionals |
| Volatility-Based | Size position based on asset's volatility | Diversified portfolios |
| Kelly Criterion | Mathematical approach based on win rate and risk/reward | Experienced traders with statistical edge |
Our calculator implements the Fixed Risk Percentage method, which is favored by many professional traders because it focuses on the potential loss rather than the position size.
By limiting risk to a small percentage of your account on each trade
Position size automatically adjusts based on volatility and stop placement
Automatically increases position sizes as your account grows
Provides a systematic framework for sizing all positions
Takes larger positions when risk is lower relative to potential reward
Everything you need to know about position sizing
Most professional traders recommend risking between 0.5% and 2% of your total account value on any single trade. Beginners should stay closer to 0.5%, while experienced traders might go up to 2% in certain situations.
The key principle is that even a string of consecutive losses (which happens to every trader) should not significantly deplete your trading capital. By risking 1% per trade, you could withstand 10 consecutive losses and still retain 90% of your capital.
Stop-loss placement should be based on technical analysis rather than a desired position size. Common approaches include:
Once you've determined your stop-loss level based on technical factors, our calculator will tell you the appropriate position size to maintain your risk parameters.
The R-Multiple is a concept popularized by trading psychologist Dr. Van Tharp. "R" represents your risk on a trade - the amount you're willing to lose if your stop-loss is hit.
This creates a standardized unit of risk which allows you to:
Our calculator shows your R value in dollar terms, which represents the amount you're risking on the trade. A trade that profits $3,000 with an R value of $1,000 would be considered a "3R winner."
The R-Multiple is a concept popularized by trading psychologist Dr. Van Tharp. "R" represents your risk on a trade - the amount you're willing to lose if your stop-loss is hit.
This creates a standardized unit of risk which allows you to:
Our calculator shows your R value in dollar terms, which represents the amount you're risking on the trade. A trade that profits $3,000 with an R value of $1,000 would be considered a "3R winner."
The calculator prioritizes your risk management parameters over other considerations. Common reasons for a smaller position size recommendation include:
Remember that position sizing is about protecting your capital first and maximizing gains second. If you want to take a larger position, consider if you can use a tighter stop-loss rather than increasing your risk percentage.
The calculator provides mathematically optimal position sizes based on your inputs, but you may need to adjust for practical considerations:
It's usually best to round down to a slightly smaller position rather than rounding up and exceeding your predetermined risk tolerance.
Options, futures, and other leveraged products require special consideration for position sizing:
For options trading, you can still use our calculator, but use the option premium as the entry price and your maximum acceptable loss per contract as the distance to your stop. Most professionals recommend using smaller risk percentages (0.5-1%) when trading leveraged products.
Still have questions about position sizing?
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