Ticker&TapePosition sizing: how many shares to buy
How many shares you buy matters as much as which stock you buy. Position sizing turns your stop into a fixed, small loss, so no single trade can seriously damage your account.
Risk a small slice of the account
Start with the account, not the stock. Decide how much of your total account you are willing to lose if the trade fails. Many disciplined traders risk 0.5% to 1% of the account per trade. On a $100,000 account, that is $500 to $1,000.
That sounds small, and that is the point. Even good traders are wrong often. With 1% risk, ten losers in a row cost about 10% of the account, which is painful but recoverable. With 10% risk per trade, the same streak would wipe out most of it.
The shares formula
Once you know your risk in dollars, the number of shares comes from the distance between your entry and your stop:
- Shares = risk in dollars ÷ (entry price − stop price)
- Example: $100,000 account, 1% risk = $1,000.
- You plan to buy a $50 stock at its pivot with a stop at $46.50, a 7% stop. Risk per share = $3.50.
- Shares = $1,000 ÷ $3.50 ≈ 285 shares, a position of about $14,250.
Set a maximum position size
The formula can produce huge positions when the stop is very tight. A 2% stop with $1,000 risk would mean a $50,000 position, half the account. A gap down overnight can blow straight through a tight stop, so cap any single position. Many growth traders keep a full position around 10% to 25% of the account, depending on how many stocks they want to hold.
Use whichever is smaller: the size from the formula or your maximum. Volatile stocks with wide ranges (see ATR and ADR) need wider stops, which the formula automatically turns into fewer shares.
Using the platform calculator
The position size calculator on the chart and in the portfolio does the math for you. Enter your account size, the percentage you want to risk, your entry and your stop. It returns the number of shares and the position value, and it can send the planned trade straight to your portfolio so the stop and reason are recorded in your trading journal.
Position sizing at a glance
| Risk per trade | 0.5% to 1% of the account |
|---|---|
| Shares | Risk in dollars ÷ (entry − stop) |
| Typical stop | No more than 7% to 8% below entry |
| Maximum position | A fixed cap, often 10% to 25% of the account |
| When unsure | Start with a half position and add if it works |
Common mistakes
- Buying a round number of shares or a fixed dollar amount without looking at the stop.
- Risking more on trades you feel sure about; confidence is not an edge.
- Using a very tight stop to justify a huge position.
- Raising risk after a losing streak to win it back.
Key points
- Decide your dollar risk first: 0.5% to 1% of the account per trade.
- Shares = risk ÷ (entry − stop), capped by a maximum position size.
- Let the calculator do the math and log every trade with its stop.
Check what you learned
Answer at least 2 of 3 correctly to complete the lesson.
1. You have a $50,000 account and risk 1% per trade. You buy at $40 with a stop at $37. How many shares?
Risk is $500 and the risk per share is $3, so $500 ÷ $3 is about 166 shares.
2. Why do disciplined traders risk only about 0.5% to 1% of the account per trade?
With 1% risk, ten losers in a row cost about 10%. With 10% risk per trade, the same streak would wipe out most of the account.
3. On a $100,000 account with $1,000 of risk, a 2% stop gives a $50,000 position. What should you do?
A gap can blow through a tight stop. Many growth traders cap a full position at around 10% to 25% of the account.
Open the position size calculator → Try it on Ticker&Tape