Introduction To The Position Size Calculator

Our position size calculator is an useful tool for traders seeking to manage their risk and calculate their position size so they don’t suffer too much drawdown or risk blowing up their account.

Position sizing is one of the most important skills for traders to master early, because without correct position sizing and risk management, traders don’t survive for very long in the markets!

By using our position size calculator, you can determine the number of shares to buy for each trade, ensuring you adhere to your risk management rules.

Our calculator offers three position size models:

1. Percent of Equity Position Sizing
2. Percent Risk Position Sizing
3. Percent Volatility Position Sizing

These models enable traders to tailor their position sizing based on their unique trading styles and risk tolerance.

In addition to giving you this useful trading calculator, we will also discuss how to use the position size calculator and the inputs you need for each of the three position sizing models. Further information is also available in our detailed position sizing article.

The position size calculator is fairly self explanatory, so you can just jump in and use it now, or if you want additional details please continue reading below before using this trading calculator.

The Position Size Calculator

Three Powerful Position Sizing Models

The position size calculator allows you to size your trading positions using three powerful models:

Percent of Equity Position Sizing

This model calculates your position size based on a fixed percentage of your total account equity. The calculation works by multiplying the total equity by the percent risk per trade to determine the trade size in dollars. You then divide the dollar trade size by the current stock price to determine the number of shares to buy.

The advantage of this model is that your exposure is normalised across all trades. This means that your catastrophic risk is normalised across all trades so no individual trade should cause you a large loss at your account level. It does not, however, take into account differences in volatility between positions. Percent of equity position sizing is ideal for traders who want to maintain a consistent level of exposure across all trades to best mitigate catastrophic stock specific risk.

Percent Risk Position Sizing

The percent risk position sizing model calculates position size by risking a fixed percentage of your account equity on each trade. This works by first calculating the dollar amount of risk you want to take on, then it calculates the risk per share by calculating the difference between the entry price and the stop-loss level. The number of shares to buy is then calculated by dividing the dollar risk per trade by the risk per share.

The advantage of this position sizing model is it normalises the ordinary trade risk across all of your positions. The disadvantage of this position sizing model is that if you have a tight stop loss, the percent risk position sizing model can give you very large trade sizes. This can expose you to excessive catastrophic stock specific risk.

Percent Volatility Position Sizing

This model adjusts position size based on the stock’s volatility, measured by the Average True Range (ATR). The theory is that if you normalize all positions according to their volatility, then each position should impact your portfolio in a similar dollar magnitude. This of course assumes that volatility remains constant for the life of the trade… which it clearly does not!

The calculation uses the target percent volatility provided by you and multiplies it by the current capital to get the target dollar volatility for the position. It then divides this target dollar volatility by the Average True Range of the stock to determine the number of shares to purchase. The dollar value of the position size is calculated by multiplying the number of shares by the current stock price.

Percent volatility position sizing is perfect for traders who want to adapt their position sizing to volatility of the stocks they are trading so the daily dollar fluctuations of each trade in the portfolio tends to be the same.

Achieve Consistent Trading Results with Our Position Size Calculator

Using our position size calculator ensures that you maintain proper risk management and drastically improves your chance of achieving consistent trading results (Especially if you follow our position sizing guidelines). Select the the most suitable position sizing model for your trading strategy based on your trading goals and use the position size calculator to find your trade size. Our calculator is user-friendly and adaptable, making it a helpful tool for traders, especially when you are just starting out with position sizing calculations. Incorporating our position size calculator into your trading toolkit today!

More Trading Calculators to Improve Your Trading Decisions

Visit our Ultimate Collection of Trading Calculators Page for all our trading calculators

• Stock Market Calculator
  Project your wealth from investing in the stock market based on starting capital, returns, tax, deposits & withdrawals. The Stock Market Calculator makes it easy to set your trading goals and plan for your financial future.
• Stock Profit Calculator
  Calculate the profit or loss you will incur from an individual stock trade based on the entry and exit assumptions as well as your chosen position size. The Stock Profit Calculator is a great 'what if' analysis tool for your individual trades.
• Average Down Stock Calculator
  Calculate your average purchase price and perform scenario analysis for averaging down on stocks with our average down stock calculator. This easy calculator shows you your average price depending on the number of shares you buy at each price level.
• Stock Split Calculator
  Calculate the impact of a stock split  on position and determine the number of shares and the share price on a split adjusted basis with our stock split calculator.
• Reverse Stock Split Calculator
  Calculate the impact of a reverse stock split on position and determine the number of shares and the share price on a split adjusted basis with our reverse stock split calculator.
• Compound Interest Calculator
  Discover our Compound Interest Calculator, designed for traders to confidently plan high level investments and project future wealth with ease including regular contributions to your account.
• Stock Average Calculator
  Calculate your stock average price quickly and easily for multiple purchases of the same stock with this easy to use stock average calculator. Find the average price for up to 10 purchases in the same stock.
• Position Size Calculator
  Maximize profits & manage risk with our Position Size Calculator! Optimize your trade sizes using 3 powerful sizing models tailored to your trading style.
• Expected Return Stock Calculator
  Use our Expected Return Stock Calculator to find the expected profit based on outcome scenarios for the stock. Start making confident decisions by using probabilities instead of prediction.
• Trading Expectancy Calculator
  Unlock the true potential of your trading strategy with the Trading Expectancy Calculator. Master profitability by predicting gains and losses over multiple trades. Elevate your trading game now!
• Risk Reward Calculator
  The Risk-Reward Calculator helps traders quickly assess the potential profit versus the risk of a trade by calculating the risk-reward ratio based on the entry price, stop loss, and target price.
• Rule of 72 Calculator
  Use the Rule of 72 Calculator to quickly estimate how long it takes to double your investment. Learn the formula, calculate exact time frame estimates to double your investments at different interest rates.
• Trading For A Living Calculator
  Curious how much capital you need to trade for a living? Our Trading for a Living Calculator reveals the exact amount based on returns, taxes, and drawdowns. Calculate now!
• Capital Gain Stock Calculator
  The Capital Gain Stock Calculator helps traders estimate their before and after-tax capital gains on stock trades, accounting for factors like purchase price, sale price, holding period, and tax rates. Use it to quickly determine how much tax you might owe based on long-term or short-term gains, and plan your trading strategy more effectively.
• Drawdown Calculator
  The Drawdown Calculator helps traders calculate the percentage and dollar losses from their portfolio's peak value. Simply input your peak equity and lowest value after the peak to instantly determine your drawdown and better manage your risk.
• Short Stock Profit Calculator
  Use our Short Stock Profit Calculator to estimate your net profit or loss on short trades. Factor in commissions, borrow rates, and holding period for accurate results.

More Articles on Risk Management for Traders

Unlock the key to consistent trading with more in depth articles on risk management for traders. Click below for all our trading risk management articles:

• Are You at Risk of Drowning Your Stock Trading Account
• 5 Expert Traders on The Importance Of Risk Management
• How Much Capital Should You Risk Per Trade? | Learn Stock Trading
• Risk Management in Crypto Trading
• How Do You Do Proper Risk Management When Trading Stocks?
• Bear Market Stock Trading Risk Management Survival
• Position Size Calculator | Easily Calculate your position size using 3 position sizing models