Position Sizing Formula: How Many Shares or Coins Should You Buy?
A beginner-friendly position sizing formula using account risk, stop distance, and units so every trade has controlled downside.
· 6 min read · position-sizing, risk, calculator, basics
Position sizing is the part of trading that keeps a wrong idea from becoming a disaster. The goal is not to buy as much as you can. The goal is to decide the maximum acceptable loss first, then calculate the number of shares or coins that fits that loss.
The simple formula
Units = account risk dollars / stop distance. If your account is $10,000, you risk 1% ($100), enter at $50, and stop at $47.50, your stop distance is $2.50. $100 / $2.50 = 40 shares.
Confidence is not a sizing input
Bar comparison showing that a 10% drawdown needs 11% to recover, 25% needs 33%, 50% needs 100%, and 75% needs 300%. Deeper drawdowns require disproportionately larger recoveries.
Beginners often double size when a setup "looks obvious." That is backwards. The more obvious a setup feels, the more carefully you should check where you are wrong. Size comes from stop distance and account risk, not emotion.
Practice with fixed risk
During simulator practice, keep risk constant for a full sample of trades. If you change size after every win or loss, you cannot tell whether the setup improved or the sizing noise changed the result.
Use the position size calculator →
Frequently asked questions
What percent should beginners risk per trade?
For practice, 1% is a useful ceiling because it makes losses meaningful without letting one mistake dominate the account. Real-money risk should be decided personally and conservatively.