Calculator Inputs
$
Total trading capital. For focused traders, use only the capital allocated to this strategy.
%
% of account you're willing to lose on this trade. Professional traders typically use 1–2%.
$
The price at which you plan to buy the stock.
$
Price at which you'll exit if wrong. Must be below entry. Usually below key support.
$
Your profit target. Used to calculate the risk/reward ratio. Enter 0 to skip.
Position Sizing Result
Shares to Buy
62
Maximum shares at your risk level
Position Size
$6,200
24.80% of account
Max Risk Amount
$496.00
2.00% of account
Risk Per Share
$8.00
Entry minus stop-loss
Risk/Reward Ratio
1 : 2.50
Favorable
Potential Gain (at target)
$1,240
Trade Visualization
Target
Entry
Stop
Risk per share: $8.00Stop distance: 8.00%Risk/Reward: 1 : 2.50
Risk Level Comparison — Same Trade, Different Risk %
How position size changes at different risk tolerances for this exact trade setup.
| Risk % | Max Loss ($) | Shares | Position Size | % of Account | |
|---|---|---|---|---|---|
| 0.50% | $125.00 | 15 | $1,500 | 6.00% | ✓ Conservative |
| 1.00% | $250.00 | 31 | $3,100 | 12.40% | ✓ Conservative |
| 1.50% | $375.00 | 46 | $4,600 | 18.40% | ✓ Conservative |
| 2.00% ◀ selected | $500.00 | 62 | $6,200 | 24.80% | ✓ Conservative |
| 3.00% | $750.00 | 93 | $9,300 | 37.20% | ⚠ Moderate |
| 5.00% | $1,250 | 156 | $15,600 | 62.40% | ✗ High risk |
Stop-Loss Placement Scenarios
How share count changes based on different stop-loss distances from entry ($100.00).
| Stop Distance | Stop Price | Risk/Share | Shares | Position Size |
|---|---|---|---|---|
| 2.00% | $98.00 | $2.00 | 250 | $25,000 |
| 4.00% | $96.00 | $4.00 | 125 | $12,500 |
| 6.00% | $94.00 | $6.00 | 83 | $8,300 |
| 8.00% ◀ your stop | $92.00 | $8.00 | 62 | $6,200 |
| 10.00% | $90.00 | $10.00 | 50 | $5,000 |
| 12.00% | $88.00 | $12.00 | 41 | $4,100 |
| 15.00% | $85.00 | $15.00 | 33 | $3,300 |
Why Position Sizing Matters
Most traders focus on entry/exit timing, but position sizing is what keeps you in the game. If you risk 10% per trade, five losing trades in a row (not uncommon) wipes out 40% of your account. At 1–2% per trade, five losses only costs 5–10% — manageable and recoverable.
The 1% and 2% Rules
Professional traders typically risk 0.5–2% of capital per trade. The 1% rule: never lose more than 1% on any single trade. The 2% rule: never lose more than 2%. This means a $25,000 account risks $250–$500 per trade — allowing 50–100 bad trades before account destruction.
Risk/Reward Ratio
R/R = (target − entry) / (entry − stop). A 1:2 ratio means you make $2 for every $1 you risk. Only take trades with R/R ≥ 2:1 unless your win rate is very high. At 50% win rate: you need at least 1:1 R/R to break even, and at least 1:2 to be profitable long-term.
Setting Your Stop-Loss
Place stops at technically meaningful levels — below key support, below a moving average, or below the low of the entry candle. Don't set them at round numbers (everyone else does too). Your stop should be where your trade thesis is proven wrong, not where you just feel comfortable.