Position size calculator for stock day traders
Size is the one decision you control completely on every trade. Enter your account size, how much you are willing to lose and where your stop sits, and the calculator returns the number of shares that keeps the loss at your limit if the stop is hit. No account needed.
Your result
- Shares
- 833
- Position value
- Dollar risk
- Percent of account
Shares are rounded down to a whole number, so the dollar risk is never above your limit.
Commissions, slippage and gaps through the stop can make a real loss larger than the dollar risk shown.
The position sizing formula
The calculation has three steps, and it works the same for long and short trades.
- Dollar risk equals account size multiplied by risk percent, or the fixed dollar amount you entered
- Risk per share equals the distance between entry price and stop price
- Shares equal dollar risk divided by risk per share, rounded down
Position value is shares multiplied by entry price, and percent of account is position value divided by account size.
A worked position size calculation
Say your account is $30,000 and you risk 1 percent per trade, which is $300. You plan to buy a stock that broke its premarket high at $12.50, with a stop just under the breakout level at $12.20. Risk per share is $12.50 minus $12.20, which is 30 cents.
Shares equal $300 divided by 30 cents, which is 1,000 shares. Position value is 1,000 multiplied by $12.50, which is $12,500, or about 41.7 percent of the account. If the stop fills exactly at $12.20, you lose $300 before commissions.
Now tighten the stop to $12.35. Risk per share drops to 15 cents and the same $300 risk allows 2,000 shares, a $25,000 position, about 83 percent of the account. A tighter stop means more shares, more buying power used and more exposure to slippage, so check that the stop is a real level and not just a smaller number.
How much to risk per trade
Many day traders risk between 0.25 and 1 percent of the account per trade, and some use a fixed dollar amount such as $50 or $100 while learning a setup. There is no correct number for everyone, but a few practical points apply to almost everyone.
- Keep the risk constant within a week so your day trading journal results in R are comparable
- Size down after a series of losses rather than up
- Remember that ten losses in a row at 2 percent costs about 18 percent of the account
- Check buying power and the pattern day trader rule if your account is under $25,000
- Low float stocks can gap through a stop, so consider a smaller size on names under 10 million shares of float
Placing the stop before sizing
The calculator only works if the stop comes first. Decide where the trade is wrong, such as below the premarket high you just broke, below VWAP or below the low of the last 1 minute candle, then let the size follow from that distance. Picking a size first and then squeezing the stop to fit is one of the most common ways to turn a sound setup into a loss.
Volatile stocks with a large ATR need wider stops and therefore fewer shares. The ATR filter in the stock scanner shows the typical range so you can see in advance whether a stop of 10 cents is realistic on a stock that moves $1.20 a day.
Position sizing inside DayTradingSoftware
The same calculator is built into the app. When you click a symbol on a scan, entry and stop can be filled from the chart, and the planned risk is saved with the trade. That planned risk is what the trading journal uses to calculate your result in R, and what the risk reward calculator uses to show the win rate a setup needs to break even.
This calculator is a tool, not advice
The result is arithmetic based on the numbers you enter. It does not account for commissions, slippage, halts or gaps, and it is not investment advice. Trading involves substantial risk of loss. Past performance and backtests do not guarantee future results.
Built in on every plan
The position size and risk calculator is included in Starter, Pro and Desk, together with the real-time scanner and journal. Starter is $49 per month or $24 per month billed yearly. See pricing.
FAQ
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Does the calculator work for short trades
Yes. For a short, the stop is above the entry. The calculator uses the absolute distance between entry and stop, so the share count is the same formula.
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Why are shares rounded down
Rounding down keeps your dollar risk at or below the limit you set. Rounding up would risk slightly more than you planned.
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Should I use percent or a fixed dollar amount
Percent scales with your account as it grows or shrinks. A fixed dollar amount is simpler while learning. Use the one you will apply consistently.
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Does it include commissions
No. Commissions and slippage are added in the journal from your actual fills.