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Risk ManagementInteractive

Position Size

The amount of an asset you buy or sell in a single trade.

Also called: position sizing · how many shares · trade size · lot size

In plain language

Position size is the answer to "how many?" — shares, contracts, coins or lots. It is the one variable in a trade you control completely.

The right size is not a preference. It falls out of two numbers you have already decided: how much money you are willing to lose on this trade, and how far away your stop sits. Divide the first by the second and you have your size.

This means position size is a consequence of your stop, not an independent choice. Move the stop further away and the correct size shrinks. Bring it closer and the size grows — while the dollar risk stays identical.

The formula

Position Size

Maximum Risk ÷ Risk Per Share

Maximum Risk
Account Size × Risk Per Trade %
Risk Per Share
The distance between your entry and your stop loss

Change the numbers

This is the concept as a working tool. Edit any field and watch what moves — that relationship is the thing worth remembering.

Try it yourself
Maximum Risk
$100
Risk Per Share
$2
Position Size
50shares

Widen the stop and the position shrinks. Tighten it and the position grows — but the $100 you risk never changes. That is the whole point of sizing this way.

Open the full position size calculator

Seen on a chart

A long trade with the entry above the stop loss, and the risk measured between themRISKENTRY$50.00STOP$48.00$2.00Long trade — price falling is the losing direction
The distance between entry and stop is your risk per share. Divide your risk budget by it and you have your position size.

Why it matters

Position size is the single largest determinant of whether a losing streak is an inconvenience or the end of the account. Two traders can take exactly the same trades and end up in completely different places purely because of size.

Common mistakes

  • Choosing a round number of shares first and discovering the risk afterward.
  • Using the same size on every trade regardless of how wide the stop is.
  • Sizing up after losses to "make it back", which is when the math turns hostile fastest.
  • Ignoring whether the account can actually fund the resulting position value.

Put it to work

Calculate your position sizeFull Risk Calculator

Keep exploring

These concepts are connected. Understanding one usually makes the next one easier.

Risk Per TradeRisk Management

The fixed share of your account you are willing to lose on any single trade.

Stop LossOrders

A predefined exit that closes a losing trade before the loss becomes serious.

Risk/Reward RatioRisk Management

How much you stand to gain compared with how much you stand to lose on a trade.

DrawdownRisk Management

The decline from an account’s peak value to its lowest point before a new peak.

Notional ValueRisk Management

The total market value of a position — size multiplied by price.