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.
Changing region applies typical local defaults (portfolio size, entry/stop prices) and currency formatting.
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
$3
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
Position sizing is the practice of deciding how large a trade to be before you place it, rather than risking an arbitrary amount. The Kelly Criterion is a mathematical formula that tells you the fraction of your capital to risk in order to maximize the long-run growth rate of your portfolio. Full Kelly is mathematically optimal but produces large drawdowns. Half and quarter Kelly reduce volatility significantly at the cost of slightly slower growth. The fixed-risk method is the most common approach used by professional traders: you decide in advance that you will never risk more than a set percentage of your portfolio on any single trade.
Worked example
Portfolio value: $50,000. Win rate: 55%. Average win: 5%. Average loss: 3%. Entry price: $100. Stop loss: $97. Max risk per trade: 2%. Loss rate: 0.45. Win/loss ratio: 1.667. Kelly fraction: 0.28 (28% of portfolio). Kelly position size: $14,000 (140 shares). Half Kelly: $7,000 (70 shares). Quarter Kelly: $3,500 (35 shares). Fixed-risk: 333 shares at $100 = $33,300 or 66.6% of portfolio.
Frequently asked questions
What is the Kelly Criterion?
The Kelly Criterion is a formula developed by John L. Kelly Jr. at Bell Labs in 1956 that calculates the optimal percentage of capital to risk on each trade to maximize the long-run compounding rate of a portfolio. It requires knowing your win rate and the ratio of your average win to your average loss. A positive Kelly fraction means you have a statistical edge. Zero or negative means you do not.
Why use half Kelly instead of full Kelly?
Full Kelly mathematically maximizes long-run growth but produces large short-term drawdowns. Simulations show that full Kelly can draw down 50% or more even on profitable strategies with good edges. Half Kelly produces approximately 75% of the long-run growth rate with roughly half the variance. Quarter Kelly is more conservative still. Most professional traders and researchers recommend 0.25x to 0.5x Kelly for real-world trading.
What is the fixed-risk method and why is it popular?
The fixed-risk method sizes a position so that if you hit your stop loss, you lose a predetermined percentage of your portfolio (commonly 1-2%). Position size = (portfolio x risk %) / (entry - stop loss). It is popular because it is simple to apply, does not require estimating win rates, and hard-caps your loss on any single trade to a known dollar amount regardless of market gaps.
What win rate do I need for Kelly to suggest any position?
Kelly produces a positive fraction whenever your expected value is positive: win rate x average win > loss rate x average loss. A 50% win rate with a 1:1 win/loss ratio gives Kelly = 0 (coin flip). A 50% win rate with a 2:1 win/loss ratio gives Kelly = 0.25 (25% of portfolio).
Should I use Kelly or fixed-risk in practice?
Most active traders use fixed-risk as their primary method because it is simple and requires no win rate estimate. Kelly is useful as a check: if Kelly suggests much less than your fixed-risk position, you may be oversizing. If Kelly suggests much more, you may have a stronger edge than you are capitalizing on.
How accurate are win rate estimates?
Win rate estimates based on backtests are often overstated due to overfitting, survivorship bias, and the look-ahead bias common in manual backtests. Real live trading win rates tend to be lower than backtested rates. Use conservative estimates and consider applying a discount factor (e.g., multiply your backtested win rate by 0.85) when sizing positions.