How do I calculate how many shares to buy?

Multiply your account by your risk percentage and divide by the distance between entry and stop. For example, $5,000 × 1% = $50; with a $2.50 stop distance that is 20 shares.

What percentage of my account should one position be?

What matters is the amount at risk, not the position value. A position can be 20% of the account while the loss, if stopped, is only 1%.

Risk

What is Position size?

Pozitsiya hajmi

In short

How many shares to buy in one trade. Formula: (account × risk %) ÷ (entry − stop).

Also known as: position sizing, lot

Position size is how many shares you buy in one trade. It comes not from "how much money do I have" but from "how much am I willing to lose if the stop is hit":

Risk amount = Account × Risk per trade %
Size = Risk amount ÷ (Entry − Stop)

First the stop-loss is set from the chart — the level that shows the idea was wrong. Then the size is fitted to that stop distance. A wide stop means fewer shares, a tight stop means more shares, but the amount you lose is always the same.

Why it matters

Correct sizing turns every trade into a small, known slice of the account. Even after a string of losses the account survives and drawdown stays manageable. Picking size by gut feeling is one of the most expensive beginner mistakes.

Limitations

The formula assumes the stop fills exactly at its price. With a gap or slippage the loss will be bigger than planned. Also, a very tight stop can produce a position larger than your account — in that case cap the size at your buying power.

Position value changes, risk does not

Stop $19 → 50 shares$1,000 · risk $50

Stop $18 → 25 shares$500 · risk $50

Account $5,000, risk 1% = $50, entry $20. A wider stop means fewer shares, but the loss stays $50.

Same risk — four different positions

Stop $49 → 100 shares$5,000 · risk $100

Stop $48 → 50 shares$2,500 · risk $100

Stop $47.50 → 40 shares$2,000 · risk $100

Stop $45 → 20 shares$1,000 · risk $100

Account $10,000, risk 1% = $100, entry $50. The bar is the position value. A close stop means many shares (but half the account in one stock); a wide stop means few. The loss is $100 every time.

Example

Illustrative numbers: account $8,000, risk 1%, entry $40, stop $37.60.

Risk amount: $8,000 × 1% = $80.
Stop distance: $40 − $37.60 = $2.40.
Size: $80 ÷ $2.40 = 33.3 → rounded down to 33 shares.
Position value: 33 × $40 = $1,320 (16.5% of the account).
Loss if stopped: 33 × $2.40 = $79.20 — about 1%.

If the stop were at $39.80 (a $0.20 distance), the formula would give 400 shares — $16,000, twice the account. In that case you cap the size at the cash you actually have. For a quick calculation: position size calculator.

Mistakes and tips

Always round the size down: 33.3 → 33. Rounding up pushes your risk above the plan.
Stop first, size second — not the other way round. "I'll buy 100 and fit the stop to that" puts the stop in an illogical place.
If you open positions in several related stocks at once, also add up the total risk (portfolio heat).
Before earnings or in very volatile stocks, size smaller than usual to account for the chance of a gap.

Calculate it

Position size calculator

Enter your balance, risk percent, entry and stop — instantly see how many shares to buy and how much you lose if the stop is hit.

Frequently asked questions

How do I calculate how many shares to buy?: Multiply your account by your risk percentage and divide by the distance between entry and stop. For example, $5,000 × 1% = $50; with a $2.50 stop distance that is 20 shares.
What percentage of my account should one position be?: What matters is the amount at risk, not the position value. A position can be 20% of the account while the loss, if stopped, is only 1%.

Learn it in the Academy

This term is covered with hands-on examples and a quiz in these lessons of the interactive course.

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