What is position size?
In one line: Position size is how much you trade — the number of shares, contracts or lots — set so a loss at your stop costs only what you planned.
The one-line formula
Position size = money at risk ÷ risk per share (or per contract). Risk per share is the distance from your entry to your stop loss.
The order matters: first the stop, from the chart. Then the size, from the math.
A stock example
Your account is $5,000. You risk 1% a trade: $50.
You want to buy at $31.25 with a stop at $30.00. That's $1.25 of risk per share.
$50 ÷ $1.25 = 40 shares. If the stop is hit, you lose about $50 — the amount you chose. Fees and slippage can add a little.
A futures example
Same $50 of risk, trading MES (Micro E-mini S&P 500). Each tick is $1.25, and your stop is 10 points away — that's 40 ticks.
40 × $1.25 = $50 per contract. So the size is 1 contract. On the full-size ES, the same stop would cost $500 a contract — far too big for this plan.
Forex works the same way, but in lots and pips. The lot size calculator handles that.
Why it matters
Position size is the dial that keeps every loss the same size, no matter where the stop goes. A wide stop gets a small position. A tight stop gets a bigger one. The money at risk doesn't change.
That's what lets a losing streak stay a bad week instead of a disaster. More in how much to risk per trade.
A common mistake
Picking the size first. "I always buy 100 shares." Then the stop gets squeezed to fit, or the loss grows with every wide stop. The size should change trade to trade; the risk shouldn't.
Another one: rounding up. If the math says 40.8 shares, take 40. Rounding up quietly adds risk on every trade.
Let the position size calculator do the math in seconds.
Questions
How do I calculate position size?
Divide the money you're willing to lose by the distance to your stop. The answer is how many shares or contracts to trade.
Does position size change for every trade?
Yes, because the stop distance changes. The money at risk stays the same.
What if the math says less than one contract?
Then the trade is too big for your plan. Look for a smaller contract, a closer stop that the chart supports, or skip it.
Want the next step? We'll walk you through it.
Four free lessons by email, one every few days — each with a 10-minute exercise on a real chart.
Send Me the Free Lessons 4 short emails · No spam · Unsubscribe anytimeOr see the whole method, step by step:
See What’s Inside the Course Try everything free first. Decide when you're ready. · Open the free chart tool (works in the TradingView phone app)One chart idea a day, in plain English. Follow along: