№ 023 · Investing cluster
Position Size Calculator
Size the trade by risk, not by gut. Set how much of your account you’ll risk and where your stop-loss sits, and this works out exactly how many shares to buy so a stopped-out trade loses only what you decided — plus the reward-to-risk ratio when you add a target.
Risk-first · the 2% rule
Grading a trade after the fact instead? Use the Stock Return Calculator.
Your account01
$
%
The trade02
$
$
Target (optional)03
$
Shares to buy · long
200
$20,000.00 position · risking $1,000.00
2.00 : 1 reward-to-risk40.00% of account
Position value$20,000.00
At risk$1,000.00
Risk / share$5.00
% of account40.00%
Risk vs reward
At risk (to stop)$1,000.00
Reward (to target)$2,000.00
The trade, level by level
| Level | Price | Per share | On the position |
|---|---|---|---|
| Entry | $100.00 | — | $20,000.00 |
| Stop (long) | $95.00 | −$5.00 | −$1,000.00 |
| Target | $110.00 | +$10.00 | +$2,000.00 |
How it works · methodology
The math, in the open.
risk amount = account × risk% risk / share = | entry − stop | shares = floor( risk amount ÷ risk / share ) reward : risk = | target − entry | ÷ | entry − stop |
- account
- Total trading capital
- risk%
- Fraction of the account risked on the trade
- entry
- Planned entry price per share
- stop
- Stop-loss price per share
- target
- Optional take-profit price
Assumptions & limits
- The loss is capped only if the stop fills at its price — gaps and fast markets can produce slippage and a larger loss.
- Shares round down to whole units, so the realized risk is at or just under the budget you set.
- A position larger than the account is flagged; actually buying it would require margin and its own risks.
- Commissions, spread, and taxes are not modeled; they slightly reduce the realized reward-to-risk.
By the MintNumber Editorial Team·Reviewed
Frequently asked
Questions about position sizing
What is position sizing?
Position sizing is deciding how many shares to buy based on how much you are willing to lose, not on how much you want to make. You set a fixed slice of your account to risk on any one trade, mark the stop-loss where you will admit the trade is wrong, and the share count falls out of the arithmetic: the dollars you can lose divided by the loss per share. It is the discipline that keeps a single bad trade from doing serious damage, and most professional traders treat it as more important than picking the entry.
What is the 2% rule?
The 2% rule says never risk more than 2% of your account on a single trade. With a $50,000 account that caps the loss on any one position at $1,000, so a string of losers bleeds the account slowly instead of blowing it up. Two percent is a common ceiling rather than a law — conservative traders use 1% or less, and the right number depends on your edge, your win rate, and how many positions you hold at once. This calculator lets you set any percentage.
How do I choose my risk percentage?
Lower is safer. The math of drawdowns is unforgiving: risking 2% per trade, ten losses in a row costs about 18% of the account; risking 10%, the same streak costs nearly two-thirds. Beginners and anyone trading a strategy they have not proven should lean toward 1% or less. The more positions you hold simultaneously, the lower each one should be, because correlated trades can all hit their stops together in a bad market.
What is the reward-to-risk ratio?
It compares what you stand to make if the target is hit against what you lose if the stop is hit, per share. A 2:1 ratio means the target is twice as far from your entry as the stop, so winners pay double what losers cost. A higher ratio means you can be right less than half the time and still come out ahead — which is why many traders refuse trades below a minimum like 2:1. Enter a target price and the calculator works the ratio out for you.
What if the position is bigger than my account?
A very tight stop produces a large share count, and the calculator will flag when the resulting position costs more than your account — that would require margin (borrowed money) to actually buy. The risk on the trade is still only the percentage you set, but using leverage adds its own dangers: interest, margin calls, and losses that can exceed your deposit if the stop is jumped. If you do not trade on margin, lower the risk percentage or widen the stop until the position fits your cash.
Does this guarantee my loss is capped at the risk amount?
No. It sizes the position so that a clean exit at your stop loses about the amount you set, but real fills are not guaranteed at the stop price. A gap down at the open or a fast, illiquid market can fill you well below the stop — slippage — and the actual loss can be larger. Treat the risk amount as the planned loss under normal conditions, keep position sizes modest, and never assume a stop is a hard floor.