Position Sizing Calculator
Max Risk on this Trade
Total Position Value
The Poker Player's Secret: The Core of Position Sizing
Imagine a professional poker player. Does she go "all-in" on every promising hand? Never. A pro knows that even strong hands can lose. Her key to long-term success is bankroll management: betting a small, calculated percentage of her total chips on any single hand. This protects her from ruin and allows her to stay in the game long enough for her skills to pay off.
Stock trading is no different. **Position sizing is your bankroll management.** It answers the most critical question before any trade: "How much should I buy?" Instead of guessing, this calculator uses your account size, risk tolerance, and trade-specific stop-loss to give you a precise number of shares. This transforms trading from a gamble into a calculated business.
Complete Your Trade Analysis
- Stock Profit & Loss Calculator: After you close your position, use this to calculate your gross profit or loss on the trade.
- Brokerage Calculator: Understand the impact of fees and taxes. Calculate your *net* profit after all charges to see what you actually take home.
- Stock Average Calculator: If you plan to add to your position at different price levels, use this to find your new average entry price.
Frequently Asked Questions
What is Position Sizing?
Position sizing is a risk management strategy that determines how many units (shares) of a stock you should purchase for a single trade. It's designed to ensure that if the trade goes against you and hits your stop-loss, the resulting loss will be a small, predefined percentage of your total trading capital.
What is the 1% rule in trading?
The 1% rule is a widely respected risk management guideline. It recommends that a trader should never risk more than 1% of their total account balance on a single trade. For an account of $25,000, this means the maximum acceptable loss for one trade is $250. This strategy helps protect capital and allows a trader to withstand a series of losing trades without blowing up their account.
What if I want to short a stock?
The principle is the same. For a short trade, your "Entry Price" would be the price at which you sell short, and your "Stop-Loss Price" would be a price *above* your entry. Our calculator currently assumes a long trade (entry > stop-loss), but you can still use it by entering the higher price as entry and lower as stop-loss to calculate the difference; the resulting number of shares remains correct.