Risk Management

Position Size Calculator

Calculate your position size based on account size, risk percentage and stop loss.

Instrument Type
Order Direction
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%
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Calculation Results
Risk Amount $100.00
Stop Distance 5.00
Position Size 20.00 Shares
Risk Reward Targets Preview
1:1 Target $105.00 +$100.00
1:2 Target $110.00 +$200.00
1:3 Target $115.00 +$300.00
Risk (Stop Loss) Reward (Target)
Formulas Explained

How it Works

1

Calculate Capital at Risk

Risk Amount = Account Size × (Risk % / 100)

Determines the maximum currency amount you are willing to lose on this specific trade. Usually kept under 1-2% of total capital.

2

Determine Invalidation Range

Stop Distance = |Entry Price - Stop Loss Price|

The absolute difference between entry price and stop loss price. In Forex this represents pips; in Futures it represents points.

3

Size Calculation

Position Size = Risk Amount / Stop Distance

Computes the exact number of shares, contracts, or lots to buy or sell to ensure your maximum loss matches your predefined risk threshold.

Example: Stocks Long Trade

Suppose you have an account size of $10,000 and you wish to risk 1.0% on a long stock position.

You want to buy shares of a stock at $150.00 with a Stop Loss set at $145.00. The stop distance is $5.00 per share.

Your calculated position size will be 20 shares, exposing exactly $100.00 of risk. If price hits stop loss, you lose $100. If price reaches the 1:2 reward target of $160.00, you gain $200.

Account Capital $10,000
Max Risk Amount $100.00
Stop Distance $5.00
Required Sizing 20 Shares
Best Practices

Risk Management Tips

The 1% Risk Rule

Limit your risk on any single trade to 1% or 2% of your account size. This protects your account from catastrophic drawdown streaks.

Always Use a Stop

Define your exit point before entering a trade. Never adjust your stop loss wider once the trade is active to avoid emotional decisions.

Skew Risk Reward

Aim for trades with at least a 1:2 or 1:3 reward-to-risk ratio. This means you can be wrong 60% of the time and still be net profitable.

Monitor Correlation

Be mindful of open positions in highly correlated assets (e.g., EURUSD and GBPUSD). Sizing should be reduced to avoid compounding risk.

Log and Audit

Document every trade, including sizing decisions and exit reasons. Reviewing past mistakes builds consistency and self-discipline.