The Complete Guide to Position Sizing
By Arshi Khan, Founder of Just4Marketing · Last reviewed October 2026
Position sizing answers the most important question in trading: how much should I buy? Instead of picking a number that feels right, you decide how much of your account you're willing to lose if your stop-loss is hit, and let the distance to that stop set the size. This guide shows the formula and why it keeps losses predictable.
The position size formula
Amount at risk = account balance × risk percentage. Risk per coin = |entry − stop-loss|. Position size = amount at risk ÷ risk per coin. The calculator works for long trades (stop below entry) and short trades (stop above entry).
How risk percentage changes the size
| $10,000 account, entry $60,000, stop $58,500 | Amount at risk | Position size | Position value |
|---|---|---|---|
| 0.5% risk | $50 | 0.0333 coins | $2,000 |
| 1% risk | $100 | 0.0667 coins | $4,000 |
| 2% risk | $200 | 0.1333 coins | $8,000 |
Using position sizing well
Set the stop first
Place your stop where the trade idea is proven wrong, then calculate size. Don't move the stop to fit a size you wanted.
Account for fees and slippage
Fast markets can fill your stop below the price you set, so real losses can be slightly larger.
Check leverage separately
If your position is larger than your balance, you're using leverage. Check its liquidation price is well beyond your stop.
Frequently asked questions
How do I calculate position size?
Position size = (account balance × risk %) ÷ (entry price − stop-loss price). With $10,000, 1% risk, an entry of $60,000, and a stop at $58,500, you risk $100 over a $1,500 move, so the position is 0.0667 coins worth $4,000.
What percentage should I risk per trade?
Many traders risk 0.5%–2% of their account per trade. At 1%, ten losses in a row cost about 10% of the account, which is recoverable; at 10% per trade, the same streak would cost most of it.
Why is my position bigger than my risk?
Because you only lose the amount at risk if the price falls to your stop. A $4,000 position with a stop 2.5% below entry loses $100 at the stop, not $4,000.
What is a good reward-to-risk ratio?
Many traders look for at least 2:1, meaning the target is twice as far from entry as the stop. With 2:1, you can be right only 40% of the time and still come out ahead before fees.