Position Size Calculator
Position Size Calculator
How many shares to buy so that, if your stop-loss is hit, you lose no more than a set percentage of your trading account. Arithmetic on your own risk limit, not a trading strategy.
Position size
A $5,00,000 account, risking 1%, buying at $250 with a stop at $240
Fixed-fractional position sizing
- account × risk %
- the most you are willing to lose on this trade
- |entry − stop|
- the loss on each share if the stop is hit, for a purchase or a short
- floor
- rounded down, so the loss at the stop never exceeds the limit
Worked example
A $5,00,000 account, risking 1%, buying at $250 with a stop at $240
Most you are willing to lose = 5,00,000 × 1% = $5,000
Risk per share = 250 − 240 = $10
Shares = 5,000 ÷ 10 = 500
Position value = 500 × 250 = $1,25,000, 25% of the account
Shares for a 5,00,000 account and a 250 entry, by stop distance and risk per trade
| Stop | 0.5% risk | 1% risk | 2% risk |
|---|---|---|---|
| 2% below entry | 500 shares | 1,000 shares | 2,000 shares |
| 5% below entry | 200 shares | 400 shares | 800 shares |
| 10% below entry | 100 shares | 200 shares | 400 shares |
| 20% below entry | 50 shares | 100 shares | 200 shares |
What position sizing does, and what it cannot do
Position sizing decides how much to buy from how much you are prepared to lose, not from how sure you feel. You choose a percentage of the account you will risk on one trade, and a stop-loss price where you accept you were wrong. The gap between entry and stop is the risk on each share, and the number of shares is the money at risk divided by that gap, rounded down. With a $5,00,000 account and 1% risk, a $10 gap allows 500 shares; a gap twice as wide allows half as many. The method is known as fixed-fractional sizing, and trading texts such as Van Tharp’s describe it.
It limits the loss only if the stop fills where you set it. Shares can open far below yesterday’s close after results or news, and a stop-loss order then fills at the next available price, not at your stop. Costs come on top: brokerage, exchange charges and taxes on every buy and sell. If the position is worth more than the account, it needs margin, and a gap can then cost more than the account holds. A stop above the entry means a short sale; the page sizes it the same way, but check what your broker and market allow.
Sizing controls the damage from each trade. It does not make trading profitable. SEBI’s own studies of individual traders in equity futures and options found that 89% lost money in 2021–22 (study of January 2023), 93% over the three years 2021–22 to 2023–24 (September 2024), and nearly 91% in 2024–25 (July 2025), when their net losses came to ₹1,05,603 crore. Small, fixed risk per trade is how a losing run is kept survivable, not a path to profit. To see the win rate a trade needs to break even, use the risk-reward calculator; to measure what a holding has actually returned, the ROI calculator. This is arithmetic on the figures you enter, not financial advice.
Frequently asked questions
How do you calculate position size?
Shares = (account × risk per trade %) ÷ (entry − stop), rounded down. A $5,00,000 account at 1% risk with a 250 entry and a 240 stop allows 5,000 ÷ 10 = 500 shares.
What percentage of my account should I risk per trade?
The calculator does not set one. Trading books often mention 1–2%, but that is a convention, not a safe level. What matters is that a long run of losses would not wipe you out, and that you can afford to lose the money at all.
Can I lose more than the amount at risk?
Yes. A stop-loss is an order, not a guarantee: if the price jumps past it, it fills at the next price available. Brokerage, taxes and leverage can add to the loss.
How does it work for a short sale?
The same way, with the stop above the entry: the risk per share is the stop minus the entry. A short at 250 with a stop at 262 risks 12 a share, so 5,000 allows 416 shares.
Related calculators
References
- Tharp VK. Trade Your Way to Financial Freedom. 2nd ed. New York: McGraw-Hill; 2007. Position sizing as a fixed fraction of the account at risk, and expressing a trade’s outcome as a multiple of the amount risked (R).
- Securities and Exchange Board of India (SEBI). Study: Analysis of Profit and Loss of Individual Traders dealing in Equity F&O Segment. 25 January 2023. 89% of individual equity F&O traders lost money in FY 2021–22.
- SEBI. Press release, 23 September 2024: Updated SEBI Study Reveals 93% of Individual Traders Incurred Losses in Equity F&O between FY22 and FY24; Aggregate Losses Exceed ₹1.8 Lakh Crores Over Three Years. Average loss about ₹2 lakh per trader; about ₹50,000 crore spent on transaction costs.
- SEBI. Comparative study of growth in Equity Derivatives Segment vis-à-vis Cash Market after recent measures. Released 7 July 2025. Nearly 91% of individual traders incurred a net loss in equity derivatives in FY 2024–25; their net losses were ₹1,05,603 crore, against ₹74,812 crore in FY 2023–24.