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MasterMath

Position Size Calculator

With 10,000 in capital risking 1% per trade, entering at 50 with a stop at 45, you buy 20 units. The most you lose is 100, whatever the position is worth.

Currency and number format for

Units to buy

—

Units to buy—
Position size—
Most you risk—
Risk per unit—
Of your capital—
Note—

How this was worked out

    Indicative result. Nothing here is investment advice. Position sizing limits your loss only if the stop actually fills at the price you set.

    The formula

    units = (capital × risk %) ÷ (entry − stop)

    Where it comes from

    Position sizing works backwards from the loss you are willing to take. The stop distance decides how much each unit can cost you, so the number of units is whatever keeps the total loss at your limit. The position value falls out of that, and it can be much larger than the risk.

    How to work it out by hand

    1. Multiply your capital by the percentage you are willing to risk
    2. Subtract the stop price from the entry price for the risk per unit
    3. Divide the first by the second
    4. Round down to whole units

    What is worth knowing

    This is the single most useful calculation in trading, and the one most often skipped. Fixing the loss rather than the position size is what makes a losing streak survivable: at 1% per trade, ten losses in a row cost about 10% of the account, which is recoverable; at 10% per trade the same streak leaves you with a third of what you started with. Note the position value here, 1,000, is ten times the amount at risk — a tight stop lets you hold a large position for a small risk, which is exactly why tight stops tempt people into positions they cannot actually afford if the stop fails to fill.

    Frequently asked questions

    How much should I risk per trade?

    One to two percent of capital is the common convention. The point is surviving a losing streak, and the arithmetic of recovery gets brutal fast: a 50% loss needs a 100% gain to undo.

    Why is the position bigger than my risk?

    Because the stop is close to the entry. You only lose the distance between them per unit, so a tight stop supports a large position on a small risk.

    What if the position exceeds my capital?

    Then it would need leverage, and the calculator says so. That is a warning, not a suggestion: leverage magnifies the failure of the stop, not just the gain.

    Does this account for costs?

    No. Commission and spread come out of the same account, so your real loss on a stopped-out trade is slightly larger than the figure shown.