What is a good risk percentage per trade?

Conservative traders risk 1% per trade, moderate traders risk 2%, and aggressive traders risk up to 5%. Risking more than 5% per trade dramatically increases the probability of ruin during a losing streak. If you lose 10 trades in a row at 2% risk each, your portfolio drops roughly 18%. At 10% risk per trade, the same streak destroys 65% of your capital.

How do I choose a stop-loss price?

Set your stop-loss based on technical levels (support/resistance, moving averages, volatility bands) or a fixed percentage below your entry. The stop should be wide enough to avoid getting stopped out by normal price noise, but tight enough that hitting it invalidates your trade thesis. Never set a stop based on how much you want to lose; set it where the trade is proven wrong, then use position sizing to control the dollar risk.

What if my position size is too small to trade?

If the calculator says to buy 3 shares and your broker charges $5 per trade, commissions will eat your edge. Either widen your stop-loss, increase your risk percentage, or skip the trade. Trading with position sizes too small to matter is a waste of capital and attention. Consider whether the opportunity is worth your time.

Can I use this for options trading?

Yes, but options complicate the math because of leverage and time decay. Enter the option premium as the entry price and your max loss per contract (premium paid for long options, or undefined risk for naked short options) as the stop distance. For spreads, calculate the max loss of the entire spread and size accordingly. The OnSumo break-even calculator can help you model options payoff structures.

What is the Kelly Criterion and should I use it?

The Kelly Criterion calculates optimal position size based on your win rate and average win/loss ratio. It maximizes long-term growth but produces highly volatile swings. Most traders use a fraction of the Kelly output (e.g., half-Kelly) to reduce volatility. Fixed percentage risk (1-2% per trade) is simpler and safer for most retail traders.

How does position sizing relate to diversification?

Position sizing limits the damage from any one trade; diversification limits the damage from any one sector or event. A well-diversified portfolio of 20 stocks with 10% position sizes can still blow up if all positions are in the same industry. Proper risk management requires both: small position sizes (via this tool) and uncorrelated holdings.

What if I am trading crypto or forex with high volatility?

High volatility requires wider stops to avoid getting chopped out by noise, which in turn forces smaller position sizes to maintain the same dollar risk. Crypto and forex traders often use 1% risk or less per trade because of the extreme swings. Adjust your position size down when trading volatile assets, or accept that your capital allocation per trade will be tiny.

Should I adjust position size based on conviction?

Some traders size larger when conviction is high and smaller when uncertain. This introduces subjectivity and can lead to ruin if your high-conviction trades cluster into a losing streak. A safer approach: keep position size constant and adjust trade frequency based on conviction. Skip low-conviction setups entirely rather than trading them smaller.

What is the difference between position sizing and asset allocation?

Position sizing determines how many shares of a single stock or asset to buy for one trade. Asset allocation determines how much of your total portfolio goes into stocks versus bonds versus cash over the long term. Position sizing is a short-term risk control tool; asset allocation is a long-term strategic decision. Use the OnSumo compound interest calculator to model long-term allocation strategies.

How do I account for slippage and commissions?

Slippage and commissions reduce your effective entry price and widen your stop distance. For a $100 entry with $1 slippage and $0.10/share commission, your real entry is $101.10. If your stop is $95, your real risk is $6.10 per share, not $5. Factor these costs into your stop distance before calculating position size, or you will underestimate your actual risk.

Stock Position Sizing Calculator

Estimate Kelly-aligned notionals beside practical fixed-risk trims, same inputs, contrasting books, all without shipping your playbook to our servers.

100% client-side. Your inputs stay in this browser.

Compare Kelly sizing (including fractional trims) versus a fixed portfolio risk mandate tied to your planned stop placement.

Country / region

Changing region applies typical local defaults (portfolio size, entry/stop prices) and currency formatting.

Portfolio value ($50,000)Between $100 and $100,000,000, desk-level precision via input.Win rate (55.0%)Avg win (5.00% of position)Avg loss (3.00% of position)Max portfolio risk (2.0%)Feeds the fixed-risk row only, choose the slice you swear you will tolerate losing.Entry price ($100)Stop loss ($97)Must sit below entry for long sizing, widen or tighten responsibly.

Full Kelly: $14,000 notionally (~140 shares at $100 quoted entry).

Kelly sizes assume your win rate and payoff stats stay stable. Most traders size below full Kelly to limit drawdowns.

Full Kelly above 25% is considered aggressive. Consider half or quarter Kelly while you reconcile edge confidence.

Kelly fraction

28.00%

Floored raw edge at zero shares

Risk / share

entry − stop (long)

Max risk (USD)

$1,000

Portfolio slice for fixed sizing

Suggested method

Use half or quarter Kelly when full Kelly exceeds your risk cap; use fixed-risk when you want a hard dollar loss per trade.

Comparison table

Method	Position (USD)	Shares	% of portfolio
Full Kelly	$14,000	140	28.00%
Half Kelly	$7,000	70	14.00%
Quarter Kelly	$3,500	35	7.00%
Fixed-risk	$33,300	333	66.60%

Position sizing by method (chart)

How this tool works

This calculator determines how many shares, contracts, or units to buy based on your total portfolio value, the percentage of capital you are willing to risk on a single trade, and the distance between your entry price and stop-loss price. The formula is: Position size = (Portfolio value × Risk percentage) / (Entry price - Stop price). The tool prevents you from risking more than your stated tolerance on any one position, which is the foundation of risk management in active trading and investing.

When to use it

Use this calculator before entering any trade where you have defined a stop-loss level. It is essential for traders who use technical analysis, options traders managing leverage, and any investor who wants to cap the maximum loss on a position before committing capital. The tool is especially valuable when trading volatile assets or using margin, where position size directly determines whether a losing trade is a minor setback or a portfolio-destroying event.

How to interpret results

The calculator returns the number of shares or units to buy and the total dollar amount to allocate. If the result exceeds your available cash, you are either risking too much per trade or your stop-loss is too tight relative to your risk tolerance. If the position size seems too small to be worth trading, your stop-loss may be too wide or your risk percentage too conservative. The output shows the maximum loss if the stop is hit, so you can verify it matches your risk tolerance before placing the order.

Worked example

Portfolio value: $50,000. Risk per trade: 2% ($1,000 max loss). Entry price: $100/share. Stop-loss: $95/share. Risk per share: $5. Position size = $1,000 / $5 = 200 shares. Total allocation: $20,000. If the stop is hit, you lose exactly $1,000 (2% of portfolio), regardless of how many shares you bought. If you had bought 400 shares instead, the same stop would cost $2,000, double your intended risk.

Key definitions

Position sizing is the process of determining how many shares or units to buy based on your risk tolerance and the distance to your stop-loss, ensuring no single trade can destroy your portfolio.

Position sizing matters because it limits the damage from losing trades, allowing you to survive drawdowns and stay in the game long enough for winning trades to compound.

Risk per trade is the maximum dollar amount you are willing to lose on a single position, typically expressed as 1-2% of total portfolio value for conservative traders.

A stop-loss is a predefined exit price that caps your loss on a trade; without one, position sizing is impossible because your risk is theoretically unlimited.

Frequently asked questions

What is a good risk percentage per trade?
Conservative traders risk 1% per trade, moderate traders risk 2%, and aggressive traders risk up to 5%. Risking more than 5% per trade dramatically increases the probability of ruin during a losing streak. If you lose 10 trades in a row at 2% risk each, your portfolio drops roughly 18%. At 10% risk per trade, the same streak destroys 65% of your capital.
How do I choose a stop-loss price?
Set your stop-loss based on technical levels (support/resistance, moving averages, volatility bands) or a fixed percentage below your entry. The stop should be wide enough to avoid getting stopped out by normal price noise, but tight enough that hitting it invalidates your trade thesis. Never set a stop based on how much you want to lose; set it where the trade is proven wrong, then use position sizing to control the dollar risk.
What if my position size is too small to trade?
If the calculator says to buy 3 shares and your broker charges $5 per trade, commissions will eat your edge. Either widen your stop-loss, increase your risk percentage, or skip the trade. Trading with position sizes too small to matter is a waste of capital and attention. Consider whether the opportunity is worth your time.
Can I use this for options trading?
Yes, but options complicate the math because of leverage and time decay. Enter the option premium as the entry price and your max loss per contract (premium paid for long options, or undefined risk for naked short options) as the stop distance. For spreads, calculate the max loss of the entire spread and size accordingly. The OnSumo break-even calculator can help you model options payoff structures.
What is the Kelly Criterion and should I use it?
The Kelly Criterion calculates optimal position size based on your win rate and average win/loss ratio. It maximizes long-term growth but produces highly volatile swings. Most traders use a fraction of the Kelly output (e.g., half-Kelly) to reduce volatility. Fixed percentage risk (1-2% per trade) is simpler and safer for most retail traders.
How does position sizing relate to diversification?
Position sizing limits the damage from any one trade; diversification limits the damage from any one sector or event. A well-diversified portfolio of 20 stocks with 10% position sizes can still blow up if all positions are in the same industry. Proper risk management requires both: small position sizes (via this tool) and uncorrelated holdings.
What if I am trading crypto or forex with high volatility?
High volatility requires wider stops to avoid getting chopped out by noise, which in turn forces smaller position sizes to maintain the same dollar risk. Crypto and forex traders often use 1% risk or less per trade because of the extreme swings. Adjust your position size down when trading volatile assets, or accept that your capital allocation per trade will be tiny.
Should I adjust position size based on conviction?
Some traders size larger when conviction is high and smaller when uncertain. This introduces subjectivity and can lead to ruin if your high-conviction trades cluster into a losing streak. A safer approach: keep position size constant and adjust trade frequency based on conviction. Skip low-conviction setups entirely rather than trading them smaller.
What is the difference between position sizing and asset allocation?
Position sizing determines how many shares of a single stock or asset to buy for one trade. Asset allocation determines how much of your total portfolio goes into stocks versus bonds versus cash over the long term. Position sizing is a short-term risk control tool; asset allocation is a long-term strategic decision. Use the OnSumo compound interest calculator to model long-term allocation strategies.
How do I account for slippage and commissions?
Slippage and commissions reduce your effective entry price and widen your stop distance. For a $100 entry with $1 slippage and $0.10/share commission, your real entry is $101.10. If your stop is $95, your real risk is $6.10 per share, not $5. Factor these costs into your stop distance before calculating position size, or you will underestimate your actual risk.

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