Position Size and Risk Calculator

How it works

The calculation runs backwards from the loss, not forwards from the capital.

Your maximum loss is capital times risk percentage. The distance between entry and stop is the loss per unit. Divide the first by the second and you have the number of units.

With $5,000 of capital, 1% risk, and a stop $2,000 below a $60,000 entry: you may lose $50, each unit loses $2,000, so the position is 0.025 units — about $1,500 of notional value.

Why the risk percentage is small

One to two percent per trade is the usual range, and the reason is in how losses compound.

A 10% drawdown needs an 11% gain to recover. A 50% drawdown needs 100%. Risking 10% per trade means five losses in a row — an entirely ordinary sequence — halves the account and doubles the work required to get back.

At 1% per trade, those same five losses cost under 5% and the account carries on normally.

Where the stop actually belongs

The stop distance in this calculation should come from the market, not from the position size you would like.

Placing the stop where the trade idea is invalidated — below a structural level, outside the asset's normal range of movement — and then sizing to fit is the right order. Choosing the size first and putting the stop wherever the arithmetic allows produces a stop that ordinary noise sweeps away.

• Set the stop from the chart, then size the position to fit it.
• Volatile assets need wider stops and therefore smaller positions for the same risk.
• Fees and slippage add to the real loss; leave a little margin beyond the stop distance.
• On leveraged positions, check the liquidation price sits further away than your stop.
• Risk per trade is not total exposure; several correlated positions are one bet.

This calculator sizes one position. It does not know about your other open positions, and correlated trades multiply real risk beyond what any single calculation shows.