What is the Position Size Risk Calculator?
A position size risk calculator tells you how many shares to buy so that a single trade never risks more than a fixed share of your capital. Instead of guessing a quantity, you decide how much you are willing to lose, and the calculator works backwards from your entry price and stop loss to a safe number of shares.
How does it work?
You set a risk boundary — say 2% of your funds — which becomes the maximum rupee amount you are prepared to lose on the trade. The distance between your buy price and your stop loss is the risk per share. Dividing your risk budget by the risk per share gives the position size. The result is then capped by what your available funds can actually buy, and an optional target price reveals the potential profit and the risk:reward ratio.
Formula
Shares = (Funds × Risk%) ÷ |Buy Price − Stop Loss|
- Funds = total capital available for the trade
- Risk% = share of funds you are willing to lose
- Buy Price = your planned entry price per share
- Stop Loss = price at which you exit to cap the loss
- |…| = absolute distance between entry and stop (risk per share)
Example calculation
With ₹1,00,000 of funds, a 2% risk boundary, a buy price of ₹100 and a stop loss of ₹95, your risk budget is ₹2,000 and your risk per share is ₹5. That allows 400 shares, an investment of ₹40,000 and a maximum risk of ₹2,000. If your target is ₹110, the reward per share is ₹10, giving a potential profit of ₹4,000 and a 1:2 risk:reward ratio.
Benefits
- Caps the loss on any single trade to a level you choose in advance.
- Removes emotion and guesswork from deciding how much to buy.
- Makes risk:reward explicit before you place the order.
- Keeps position sizes consistent across trades and market conditions.
Limitations
- Ignores brokerage, taxes, slippage and gap-downs through your stop loss.
- Assumes the stop loss is honoured exactly at the chosen price.
- Does not account for leverage, margin or correlation between open positions.
Conclusion
Sizing positions by risk — not by hunch — is one of the simplest ways to protect your capital and survive losing streaks. Use this calculator to set a position size you are comfortable with, then always trade with a stop loss in place.