Worked example
Account 10,000, risk 1 % (100), entry 50, stop 48: risk per share 2, 50 shares, position value 2,500 (25 % of the account), actual risk 100. Stop distance 4 % of the entry.
Formula
- Risk amount = account size x risk per trade (%).
- Risk per unit = |entry - stop| x multiplier (1 for shares and spot crypto, the contract multiplier for futures).
- Units = risk amount / risk per unit, rounded down to the unit step (1 share, 0.0001 BTC, 1 contract).
- Position value = units x entry x multiplier. Actual risk = units x risk per unit, never above the risk amount.
Limits
- A stop is not a guaranteed exit price: gaps, fast markets and slippage can make the real loss larger than planned.
- Fees, financing and spreads are not included.
- Forex lots need the pip value of the pair in your account currency: enter the price distance and the value per unit carefully, or use your broker figures.
- A position worth more than the account requires margin or leverage and adds its own risks.
Questions
How much should I risk per trade?
The calculator does not decide that. Fixed fractional sizing commonly uses a small, constant percentage so that a losing streak does not destroy the account. Choose it from your own risk limits.
Why is my position worth more than my account?
A tight stop allows many units for the same risk. The value can exceed the account: the tool flags it because it would need margin.
Does it work for short trades?
Yes. A stop above the entry is treated as a short position. The size formula is the same.