Position size calculator

The fixed-fractional idea

Fixed-fractional sizing risks the same small percentage of the account on every trade, commonly 1% or less. The point is survival arithmetic. Losses compound against you asymmetrically: a 10% drawdown needs an 11% gain to recover, a 50% drawdown needs 100%. Risking 1% per trade, a run of ten straight losers costs about 9.6% of the account, painful and recoverable. Risking 10% per trade, the same run costs 65%. Since the percentage applies to the current balance, size shrinks automatically in a losing streak and grows in a winning one, which is the discipline doing its job.

A worked example

Take a $10,000 account risking 1% per trade, a stock entered at $50.00 with a stop at $46.00. The risk budget is 1% of $10,000, which is $100. Each share loses $4.00 if the stop fills, so the position is 100 divided by 4: 25 shares, rounded down. That is $1,250 of stock, 12.5% of the account, but only $100 is actually at risk if the plan holds. Note what the formula did: the stop distance set the size. A tighter stop at $48.00 would allow 50 shares; a wider stop at $42.00 allows only 12.

The stop is a plan, not a guarantee

The calculation assumes the stop fills at its price. Stocks gap through stops on earnings and overnight news, and thin names slip in fast markets, so real losses can exceed the budget. That argues for the conservative direction on every choice here: round shares down, avoid holding oversized positions through binary events, and treat the risk percent as a ceiling. If the calculator shows a position larger than the account, the honest reading is not "use margin", it is that the stop is too tight or the risk budget too ambitious for the price.

Why sizing beats forecasting

A trader who is right 55% of the time with equal wins and losses grinds forward slowly; the same trader oversizing a few favorites can lose money on the same picks. Sizing is the one input you fully control. It cannot turn a losing strategy into a winning one, but it decides whether a winning strategy survives its own bad months. The same logic priced in probabilities lives in the odds calculator's Kelly section, which sizes from your estimated edge instead of a stop distance.