How many shares to buy so that, if your stop is hit, you lose exactly the amount you decided to risk.
Position size = (account size × risk %) ÷ |entry − stop|, rounded down to whole shares. The stop decides the size, not the other way round: a wider stop means fewer shares for the same risk.
Example: a 25,000 account risking 1% is 250. Entry 50, stop 48 is 2 per share, so 125 shares, a position worth 6,250.
Many traders cap risk at 0.5% to 2% of the account per trade, so a losing streak cannot do lasting damage. The right number depends on your own win rate and payoff ratio; a journal shows you both.
Yes. The distance between entry and stop is taken as an absolute value, so a stop above a short entry works the same way.
Rounding up would put slightly more than your chosen amount at risk. Rounding down keeps the loss at or under it.
TradeGreen connects to your broker read-only and works out R-multiple, win rate, profit factor and expectancy for every setup, from your real fills.
Download on iPhone Get it on Google PlayEducational tool, not investment advice. TradeGreen describes trades that already happened and never recommends what to buy.