How to calculate position size from your risk
Short answer
Decide the most you will lose on the trade (e.g. 1% of a $10,000 account = $100). Divide by the distance from your entry to your stop (entry 100, stop 95 = $5 a unit): 100 / 5 = 20 units, a $2,000 position. With a target at 115 the reward:risk is 15 / 5 = 3:1. Include fees by adding them to the per-unit risk.
- Pick the risk per trade as a % of the account.
- Measure entry minus stop per unit.
- Units = money at risk / (per-unit risk + fees).
- Check the position value is not larger than the account (that would be leverage).
Copy-paste code
Position size
units = (account x risk%) / |entry - stop|
example: (10,000 x 1%) / (100 - 95) = 20 unitsGood to know
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What risk % do people use?
Many traders use 0.5-2% per trade; it is your decision.
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