Position Size Calculator

Position sizing determines the exact number of shares, contracts, or lots to trade on each entry, based on your account size, risk tolerance per trade, and the distance to your stop-loss. Proper position sizing is what separates disciplined risk management from gambling.

Fixed Risk (Percentage Risk) method: Shares = (Account Size × Risk % per Trade) ÷ (Entry Price − Stop-Loss Price)

Where:

• Account Size: total trading capital
• Risk % per Trade: typically 0.5–2% of account per trade (professional standard: 1%)
• Entry Price − Stop-Loss: the dollar risk per share; also called the “stop distance”

Kelly Criterion formula: f = (bp − q) ÷ b*

Where:

• f* = fraction of account to risk
• b = net odds received per trade (average win ÷ average loss)
• p = probability of winning
• q = probability of losing = 1 − p

The Kelly criterion gives the mathematically optimal bet size to maximize long-run account growth. In practice, traders use Half Kelly or Quarter Kelly to reduce volatility.

What each variable means:

• R-multiple: your risk unit; 1R = your fixed dollar risk on the trade. A 2R winner pays twice your risk. A −1R loser costs exactly your planned risk.
• Risk per trade (%): a percentage of what is left each time, so the account shrinks geometrically rather than in equal steps. At 1% it takes 69 straight losses to halve the account and at 10% it takes 7. It never technically reaches zero, which is exactly why the table below is written in “% remaining” and not in “trades until broke”
• Position size in dollars = Shares × Entry Price
• Leverage: using margin, your position size can exceed account equity; this amplifies both gains and losses proportionally

Reference: account survival by risk per trade

• 0.5% risk/trade: 99.5% of capital remains after 1 loss; 10 losses → 95.1% remaining
• 1.0% risk/trade: 99.0% after 1 loss; 10 losses → 90.4% remaining
• 2.0% risk/trade: 98.0% after 1 loss; 10 losses → 81.7% remaining
• 5.0% risk/trade: 95.0% after 1 loss; 10 losses → 59.9% remaining

Worked example, fixed risk method: Account: $25,000. Risk: 1% = $250 per trade. Stock: Entry at $85.00, stop-loss at $81.50. Stop distance = $3.50/share.

Shares = $250 ÷ $3.50 = 71.4 → 71 shares Position value = 71 × $85.00 = $6,035 (24.1% of account in one trade) Maximum loss if stopped out = 71 × $3.50 = $248.50, slightly under the $250 target, which is the correct direction to round.

Kelly check on the same account. Win rate 55%, avg win $350, avg loss $175, so b = 350/175 = 2.0. f* = (2.0 × 0.55 − 0.45) ÷ 2.0 = (1.10 − 0.45) ÷ 2.0 = 0.65 ÷ 2 = 32.5%, full Kelly. Half Kelly is 16.25%.

Read that number carefully, because this is where Kelly gets people hurt. f* is the fraction of the account to risk, not the size of the position. Half Kelly on $25,000 means risking $4,062 on the trade. With a $3.50 stop that buys 1,160 shares, a $98,600 position on a $25,000 account, and a single stop-out costs 16% of everything. The 1% method risked $250 for a $6,035 position. So Kelly here is sixteen times more aggressive than the fixed-percentage method, not less.

Full Kelly assumes your win rate and payoff are known exactly and never change. They are estimates from a sample, and if the true edge is smaller than measured, Kelly overbets so badly that the account bleeds out while the edge is still positive. This is why the traders who actually use it run a quarter of it or less, and why a 1 to 2% fixed risk is the standard the professionals settled on.