Position size is where a risk limit becomes real. You can decide you will risk a small percentage of your account per trade, but until that decision is converted into an actual order size, it is just a sentiment. The position-size calculator does the conversion with arithmetic, so the size that hits the exchange is set by your limit and your stop — not by how confident you happen to feel.
The two inputs that matter
Sizing by risk needs exactly two numbers: how much you are willing to lose on this trade, and how far price has to move against you before you are out. The first is your risk-per-trade limit. The second is your stop distance. Together they pin down the largest size that keeps a losing trade inside your limit.
Step by step
- Enter your risk per trade. Input the amount you are willing to lose on this trade — usually a small percentage of the account, taken straight from your risk policy.
- Enter the stop distance. Add the distance from your entry to your stop, since that is what a loss on this trade actually costs per unit held.
- Read the position size. The calculator divides your risk amount by the stop distance to return the size that caps the loss at your limit.
- Cross-check the cost. Run the result through the trading cost calculator so fees and spread do not quietly push the real loss past your limit.
Why math beats gut here
Sized by feel, a position grows when you are confident — which is exactly when overconfidence is most expensive. Sized by risk, the calculator hands you a smaller position when your stop is wide and a larger one when it is tight, automatically, every time. The discipline is not in resisting the urge to oversize; it is in never making the size a judgement call at all.
The risk-per-trade figure comes from the risk management pillar. Pair this with the trading cost calculator and check how far price must travel to break even using the break-even calculator.