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How to calculate position size

Position size turns a risk rule into a number of shares, contracts or lots. Here is the formula, three worked examples and the mistakes that cause oversized trades.

  • 5 min read
  • By a.b
  • Updated October 2026

The formula

position size = (account balance × risk %) ÷ (entry price − stop price)Use the absolute distance between entry and stop. For futures, multiply the distance by the dollar value of one point per contract.

The idea is simple. First decide how many dollars you are willing to lose on the trade. Then divide that by how much you lose per share (or contract, or unit) if the stop is hit. The result is the largest position that keeps your loss within your limit.

Example 1: a stock

Account of $10,000, risking 1%, buying at $50 with a stop at $48. The risk amount is $100 and each share risks $2, so the size is 100 ÷ 2 = 50 shares (a $2,500 position).

Example 2: forex

Account of $10,000, risking 1%, buying EUR/USD at 1.0850 with a stop at 1.0820 (30 pips). The risk amount is $100. Each pip on a standard lot is $10, so 30 pips costs $300 per lot. The size is 100 ÷ 300 = 0.33 lots. Use the pip value calculator if your pair is not quoted in your account currency.

Example 3: a futures contract

Account of $25,000, risking 1% ($250). You buy E-mini S&P 500 futures with a stop 5 points away. Each point is worth $50 per contract, so a stop costs $250 per contract and the size is 250 ÷ 250 = 1 contract.

Why a wider stop gives a smaller position

The dollar risk stays the same, so a wider stop must be offset by fewer shares. With a $5 stop on the same stock as example 1, the size drops to 20 shares. Place your stop where the trade idea is wrong, then size from it. Never choose the size first and move the stop to fit.

Common mistakes

  • Sizing by dollars instead of risk. "I always buy 100 shares" ignores how far away the stop is.
  • Forgetting fees and slippage. Add them to the risk per unit. The position size calculator has a fees field.
  • Ignoring gaps. Stops can fill worse than planned in fast markets or overnight, so keep your risk modest.
  • Stacking correlated trades. Three trades in the same sector are closer to one big trade.

Do it in seconds

The position size calculator does this for stocks, crypto, futures and forex, shows leverage and reward-to-risk, and lists the size at other risk levels. If you are unsure what percentage to use, read how much to risk per trade.

Try it with your own numbers

Free calculators that do the math for you. No signup, and nothing leaves your browser.

Position Size CalculatorWork out how many shares, contracts or lots to trade from your account size, risk and stop-loss.Pip Value CalculatorThe value of one pip for any forex pair and lot size, and what a move of N pips is worth.Risk Reward & Break-Even Win Rate CalculatorSee expectancy, break-even win rate and profit factor for any win rate and risk:reward ratio.

Keep reading

How much should you risk per trade?Most professional traders risk between 0.25% and 2% of their account on a single trade. Here is…What is a pip and how do you calculate pip value?A pip is the standard small step in a forex price. Its money value depends on your position size,…What is a good risk to reward ratio?There is no single good ratio. A ratio is only good in combination with your win rate. This guide…
a.b

Written by a.b. I have published trading indicators on TradingView since 2015. These guides are for education only. Message me on TradingView chat with questions or topics you want covered.

Last updated October 2026. For education only. Not financial advice.