Position sizing
Position sizing
How much of your capital a specific setup actually earns. Not a guess, not a round number that felt reasonable, an output calculated from your stop distance and your risk per trade.
Run the numbers
Position size calculator
Enter your total capital, the percentage you're risking on this trade, your entry price, and your stop price. The calculator does the rest.
For your own planning only. This calculator does not place trades, store your data, or constitute financial advice.
The core idea
A guess with extra steps
Position sizing is usually the first thing new traders think about, and it should actually be one of the last calculations made, on purpose. Deciding how many shares to buy before you know where your stop sits isn't actually a sizing decision. It's a guess dressed up as one, because the number of shares you hold has no real relationship to how much you're risking until the stop distance is already known.
Sizing isn't a separate skill from risk management, it's the arithmetic that falls out once the harder questions are already answered: where the stop goes, and how much of your total capital you're willing to lose if it's hit.
Shares to buy = (Total capital × risk %) ÷ (Entry price − stop price)
The stop distance is what makes this calculation possible at all.
The four conditions
What actually has to be true
Mechanical checks, not a feeling about how much a trade deserves.
Position size decided after the stop, never before
How many shares to buy depends entirely on how far away the stop is. Deciding size first and finding a stop that fits afterward reverses the order and quietly breaks the whole calculation.
Risk stays a fixed percentage of total capital
The rupee amount at risk on any single trade stays constant as a share of everything you're trading with, regardless of how exciting or convincing the setup looks.
A hard cap on capital deployed per position
Even with a tight stop that technically allows a large position, a separate ceiling stops any single stock from swallowing an outsized share of total capital.
The two rules checked together, not separately
A tight stop can still produce a position size that breaches the capital cap. Both numbers need to be checked before entry, not just one of them.
Why the capital cap matters too
Two worked scenarios, same account
The risk-percentage rule and the capital cap are two separate checks, and it's worth seeing why both matter with real numbers side by side.
Tight stop, small risk distance
1,000 shares, ₹5,00,000 deployed — likely breaches a capital cap even though the risk math is correct
Wide stop, larger risk distance
250 shares, ₹1,25,000 deployed — same risk percentage, far smaller position
The first scenario passes the 1% risk check cleanly but puts half the account into a single stock, since the stop is so tight that the risk formula alone allows an enormous position. This is exactly why a separate capital cap, a hard ceiling on how much of the account any one position can occupy regardless of how the risk math works out, is a second, independent check rather than something the risk percentage alone already covers.
Common misreads
What people call position sizing that isn't
Four ways this gets skipped without realizing it
A related question
Does position size ever change mid-trade?
The initial size, calculated once at entry from the stop distance and risk percentage, doesn't get revised upward once a trade is live. Adding to a position because it's working is a different decision from the original sizing calculation, and deserves its own separate risk check, not an assumption that the original math still applies to a larger position.
What does change, mechanically, is the position shrinking as a plan's exit stages are executed, a partial exit at a defined profit level reduces the position, and the risk on the remainder should be recalculated from wherever the stop has since moved to, not from the original entry.
Questions this page gets asked
A few things worth answering directly
What risk percentage should I actually use? 1% of total capital is a common, conservative starting point. A newer trader still building confidence in their own process is often better served by an even smaller number, half a percent, while that process is still being proven out. What matters far more than the exact figure is that it stays fixed and isn't renegotiated trade by trade based on how confident a setup feels.
What should my capital cap per position actually be? There's no single correct number, but somewhere in the 15 to 30% range is common for a trader holding a handful of positions at once. The right figure depends on how many total positions you typically run and how much concentration in any one name or sector you're comfortable with.
What if the calculated share count includes a fraction? Round down, never up. Rounding up means accepting slightly more risk than the calculation actually approved, which defeats the purpose of running the number in the first place.
Does this change for a smaller account? The formula and the discipline stay identical regardless of account size. What changes is the practical number of positions that can be held at once while still respecting both the risk percentage and the capital cap, smaller accounts naturally support fewer simultaneous positions before running into one of those two limits.