How to Calculate Position Size Like a Professional
The 1% rule, position size formula, and a step-by-step example. Stop guessing share counts and protect your account.
The Golden Rule: Risk a Fixed % Per Trade
Professionals never risk more than 1–2% of their account on a single trade. This is called fixed fractional position sizing.
The Position Size Formula
Position Size = (Account × Risk%) / (Entry − Stop Loss)
Worked Example
- Account: $10,000
- Risk per trade: 1% = $100
- Entry: $50.00, Stop: $48.00
- Risk per share: $2.00
- Position size: $100 / $2.00 = 50 shares
Verify with the Position Size Calculator.
Common Mistakes
- Using account leverage as the basis (wrong: leverage is a tool, not a budget).
- Risking 5–10% per trade. Five losers in a row → -40% drawdown.
- Moving stop losses to "give it room". This breaks your math.
Related reads
Hard stops vs mental stops, ATR-based stops, structure stops, and how to never let one trade ruin your week.
The single question that separates traders who survive from traders who blow up. Learn the pro answer to how much of your account you should risk on any single trade.
The seven risk management mistakes that account for the vast majority of blown trading accounts — plus the exact fix, real examples and tools for each.