Reality check: this is a math tool, not financial advice.
Calculator
How it works
risk_amount = account × (risk_pct ÷ 100)
position_size = risk_amount ÷ stop_distanceThis calculator outputs position size in “units” of your stop distance. Your platform may use contracts, shares, lots, or tokens, convert units accordingly.
Why 1% is the default, and when it is not
One percent is not a magic number, it is a survival number. If you risk 1% per trade, a run of ten straight losses leaves you down roughly 9.6%, which is annoying but recoverable. At 5% per trade the same losing streak takes you down about 40%, and you now need a 67% gain just to get back to even. That asymmetry is the whole argument. Losses compound against you faster than gains compound for you.
Ten losses in a row sounds unlikely until you do the maths. A strategy that wins 40% of the time will produce a ten-loss streak roughly once every 165 trades. If you take three trades a day, that is a normal Tuesday a few months from now, not a freak event. Size for the streak you will definitely meet, not the one you hope to avoid.
Go below 1% when you are trading a new strategy with no live track record, when you are trading a thin market where your stop may slip, or when you already hold correlated positions. Go above 1% only when you have a measured edge over a meaningful sample, and even then 2% is a sensible ceiling for discretionary trading.
Converting units into shares, lots, and contracts
The calculator returns position size in units of your stop distance. That number is only useful once you convert it into whatever your broker actually trades. The conversion differs per asset class, and getting it wrong is one of the most common ways traders accidentally take ten times the intended risk.
Stocks and ETFs. The unit is one share, so the output is already your share count. Risking $100 with a $2.50 stop distance gives 40 shares. If the result is fractional and your broker does not support fractional shares, always round down.
Forex. Convert through pip value. A standard lot of EUR/USD is 100,000 units, where one pip is about $10. If you are risking $200 with a 25 pip stop, you can afford $8 per pip, which is 0.8 of a standard lot, or 8 mini lots. Pairs that do not have USD as the quote currency need the pip value converted into your account currency first.
Crypto. The unit is the coin itself. Risking $150 on Bitcoin with a stop $900 below entry gives 0.1667 BTC. Note that your position value here is far larger than your risk, which is exactly as intended and exactly what confuses people about leverage.
Futures. Convert through tick value, and check the contract specification rather than assuming. One ES point is $50 and one tick is $12.50, so a 12 point stop risks $600 per contract. If your risk budget is $300, this trade does not fit in one contract and the honest answer is to skip it or trade the micro contract instead.
Position size is not leverage
These two get conflated constantly, and the confusion is expensive. Leverage describes how much capital your broker fronts you. Risk describes how much you lose if the trade goes against you to your stop. They are independent, and only one of them can hurt you.
A trader with a $10,000 account who buys $50,000 of Bitcoin at 5x leverage with a 1% stop is risking $500, or 5% of the account. Another trader at 20x leverage buying $200,000 with a 0.1% stop is risking $200, or 2%. The second trader used four times the leverage and took less than half the risk. Leverage sets your liquidation distance, your stop sets your loss. Size from the stop and treat leverage purely as a margin constraint.
Let the invalidation decide the size
The order of operations is fixed and most traders get it backwards. Find the level that proves your idea wrong, place the stop beyond it, measure the distance, then let the calculator tell you the size. Never pick a size first and then hunt for a stop that justifies it, because that is how stops end up sitting inside noise where they get taken out for reasons that have nothing to do with your thesis.
This has a consequence people dislike: wide stops produce small positions. A trade needing a 6% stop on a $10,000 account at 1% risk gets you $1,667 of exposure, and that feels too small to bother with. It is not too small, it is correctly sized. The alternative is not a bigger position, it is a better entry closer to invalidation. If a setup only works with a stop you cannot afford, the setup is telling you to wait.
Correlation is the risk you forget to count
Position sizing per trade is only half the job. Five separate 1% trades look like 5% of total risk, but if all five are long altcoins, you do not have five positions, you have one position in five wrappers. Crypto correlations routinely run above 0.8 against Bitcoin, and they tighten precisely when things go wrong, which is the worst possible time for your diversification to evaporate.
Cap your risk per theme, not just per trade. Two percent total across everything long the same driver is a reasonable ceiling. That driver might be the dollar, rates, oil, or simply risk appetite. Gold and silver move together. EUR/USD and GBP/USD move together. Tech stocks and Bitcoin have spent long stretches moving together. Group your positions by what actually drives them and size the group.
Mistakes that quietly ruin the maths
- Sizing on account balance instead of equity. Open losing positions have already reduced what you can risk. Use current equity, not deposits.
- Ignoring fees and funding. Commissions, spread, and overnight funding all come out of the same pocket. On short-term trades they can be a meaningful share of a 1% risk budget.
- Forgetting slippage on stops. A stop is an intention, not a guarantee. In fast markets and around news you can fill well beyond it, so treat your risk figure as a best case.
- Adding to losers without resizing. Averaging down changes your average entry and your total exposure, so the original stop no longer represents the original risk.
- Sizing up after a loss to win it back. The market has no memory of your last trade. Doubling size after a loss converts a normal drawdown into a serious one.
Worked example, start to finish
Your account is at $8,400 in equity. You risk 1%, so $84. You are looking at a long on ETH at $2,180, and the structure that invalidates the idea is a swing low at $2,105, so the stop goes just below at $2,095. Stop distance is $85. Position size is $84 divided by $85, which is 0.988 ETH, worth about $2,154. Your first target sits at the prior high near $2,350, which is $170 away, a reward to risk of exactly 2 to 1.
Now sanity check it: 0.988 ETH times $85 of stop distance is $84. The maths holds. If ETH takes out $2,095 you lose 1% and the thesis was wrong, which is the point. Notice that nothing in this process required an opinion about where ETH is going, only about where you would be proven wrong.
Related posts
- Risk Management & Position Sizing (Deep Guide)
- Trading Plan Template (Copy/Paste)
- Support & Resistance Trading
- Crypto vs Stocks Volatility
Size follows the invalidation level, so decide that first. Reading the chart in four steps ends exactly there.
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