Manage your trading risk by calculating exactly how many shares or coins to buy.
Amateur traders guess how many shares to buy. Professional traders let math dictate their size. Position sizing is the act of determining exactly how many units of an asset you should buy based on where your stop loss is placed and how much of your total account you are willing to lose if the trade goes wrong.
The golden rule of professional trading is the 1% Risk Rule. This means you should never lose more than 1% of your total trading capital on a single trade. If you have a $10,000 account, your maximum loss on any given trade should be $100. This calculator figures out exactly how many shares you can buy to ensure your risk stays locked at your chosen percentage.
First, we calculate your total Risk Amount (Account Balance × Risk Percentage). Next, we find your Risk Per Share (Entry Price - Stop Loss Price). Finally, we divide your Total Risk Amount by your Risk Per Share. The result is the absolute maximum number of shares you can buy safely.