📐 Position Size Calculator
Eliminate emotional sizing. Determine exactly how many shares to buy to cap portfolio risk at your desired dollar threshold.
Recommended Allocation
Professional Capital Preservation
Amateur traders fixate on profit targets while market wizards obsess over risk per trade. Standardizing risk to a fixed percentage (such as 1% to 2% of total equity) insulates your portfolio against psychological tilt and ensures that even a 10-trade losing streak damages your portfolio by less than 18%.
Frequently asked questions
What is the 1% or 2% risk rule in stock trading?
The 1% or 2% rule stipulates that a trader never risks losing more than 1% to 2% of their total account equity on any single trade if their stop-loss order is triggered.
How does stop-loss distance determine position size?
The tighter your stop-loss distance (entry minus stop price), the more shares you can safely purchase while keeping your maximum dollar loss constant. A wider stop requires fewer shares.
Why is position sizing more important than entry timing?
Position sizing controls drawdown and protects trading capital against catastrophic blowups. Proper position sizing guarantees you survive consecutive losing streaks to capitalize on winning trades.
Does this calculator account for overnight gap risk?
This calculator models slippage-free stop exits. In live trading, severe earnings surprises or market black swan events can gap past stop orders, so conservative sizing is always recommended.