How to Calculate Position Size Before a Trade
A practical guide to risk-based position sizing for stocks and crypto, with stop-loss distance, fees and worked trade logic.
The concept in plain English
A position size calculator converts the maximum amount you are willing to lose into a trade quantity. It divides your account risk budget by the loss per share, coin or contract between entry and stop, including estimated fees.
Open Position Size & Risk CalculatorChoose the invalidation level before the quantity
A risk budget only becomes useful when the stop has a purpose. Moving a stop closer solely to obtain a larger position changes the trade thesis. Start with a price that would invalidate the setup, calculate quantity, then check whether the resulting exposure fits your buying power. For whole-share or whole-contract orders, round down rather than up. Separately review correlated positions: several small risk budgets can still produce one concentrated account-level loss.
A $100 risk budget
A $10,000 account, 1% risk, $50 long entry, $48 stop, no fees and a multiplier of 1.
$10,000 × 1% = $100 risk. $50 − $48 = $2 risk per share. $100 ÷ $2 = 50 shares.
50 shares, $2,500 of exposure and $100 of planned price risk.
Exposure is not the same as risk. A gap below the stop can make the actual loss larger than $100.
Calculation method
Risk budget = account value × risk percentage. Unit risk = absolute entry-to-stop distance × contract multiplier, plus allocated fees. Position size = risk budget ÷ unit risk.
| Input | Purpose |
|---|---|
| Account size | Capital used to set the maximum loss budget. |
| Risk per trade | Percentage of the account allowed to be at risk. |
| Entry and stop | Price distance that defines loss per unit. |
| Fees and multiplier | Adjusts sizing for commissions and contract value. |
Step-by-step workflow
- Enter the account value and maximum risk percentage.
- Add the planned entry, stop price, fees and any contract multiplier.
- Use the calculated quantity and verify the total exposure before placing the order.
Practical benefits
- Keeps maximum planned loss consistent across trades.
- Adapts quantity to volatility through the stop distance.
- Works for long and short stock, crypto and contract setups.
Questions about Position Size & Risk Calculator
What percentage should I risk per trade?
There is no universal percentage. Many traders choose a small fixed fraction that fits their strategy, drawdown tolerance and account rules, then apply it consistently.
Does the calculator work for short positions?
Yes. Position size depends on the absolute distance between entry and stop, so the same risk-budget method applies to long and short trades.
Why include fees in position sizing?
Commissions and other execution charges add to a losing trade. Including an estimate prevents the planned risk budget from being understated.
Sources and further reading
Examples are hypothetical and exclude costs unless stated. This is educational material, not individualized investment or tax advice. Read our methodology and risk disclosure.