Risk & position sizing
How do I calculate exact position sizing based on account size and dollar risk per trade?
By Easy Money Scanner · Educational reference · Not investment advice
The short answer
Position sizing is calculated by dividing the dollar amount you're willing to risk on a trade by the per-share risk (entry price minus stop-loss price), determining the number of shares to buy.
How it works
This method keeps risk consistent across trades regardless of a stock's price or volatility, ensuring no single trade can damage the account beyond the predetermined risk tolerance.
An example
With a $10,000 account risking 1% ($100) per trade, and a $2 per-share stop distance, a trader would buy 50 shares ($100 divided by $2).
Risk & limitations
Position sizing formulas assume the stop-loss will execute at the intended price, but gaps or slippage can cause actual losses to exceed the planned risk amount.
Examples are hypothetical, not trade recommendations. US contract and regulatory references do not automatically apply in Canada. Rules, margin requirements and broker policies can change; confirm them with the relevant authority and your broker.