Position size

How it works

Risk amount = account size times risk percent. For a long, risk per unit is entry minus stop. Size is risk amount divided by risk per unit, floored to a whole number. A short uses stop minus entry. If the stop is on the wrong side of the market, size is zero.

The same arithmetic is explained in the position-size guide, including why a tight stop inflates size and why that is not “more conservative.”

Worked example

Account 50,000, risk 0.5%, long at 100, stop 97: risk amount 250, 3 points of room, 83 shares, notional 8,300. If the stop fills there, the loss is about 249 before fees.

Limits

No commissions, slippage, borrow, margin, or fractional shares. Options and futures multipliers are not modeled. A stop that gaps is not the stop you typed.