Why risk 1–2%?
Many traders cap risk per trade at 1–2% of their account so that a string of losses doesn't seriously damage their capital.
Risk a fixed percentage of your account on every trade. Enter your account size, risk tolerance, entry price and stop-loss to get the exact number of shares to buy.
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Enter your total trading account size, the percentage of that account you're willing to risk on a single trade, your planned entry price, and the price at which you'd exit if the trade goes against you (your stop-loss).
Rather than deciding how many shares to buy based on gut feeling, this method fixes your dollar risk first. The dollar amount you're willing to lose is your account size times your risk percentage. Dividing that by the per-share risk (the distance between entry and stop-loss) gives the maximum number of shares that keeps your loss, if the stop is hit, within your plan.
Many traders cap risk per trade at 1–2% of their account so that a string of losses doesn't seriously damage their capital.
This method only works if you decide your stop-loss level before sizing the position — not after you're already losing money.
Common questions, answered.
Risk amount = account size × risk percentage. Per-share risk = the absolute difference between your entry price and stop-loss price. Shares = risk amount ÷ per-share risk, rounded down to a whole share.
Many traders risk 0.5% to 2% of their account per trade. Lower percentages are more conservative and allow you to survive a longer losing streak.
The calculator can't divide by zero risk per share, so set a stop-loss that's meaningfully different from your entry price to get a valid share count.
No. This is a pure risk-sizing calculation. Add a buffer to your risk percentage or share count if your broker charges significant commissions or you expect slippage on your stop order.