Position size by risk: Sizing a Position from a Planned Loss Budget
Position sizing divides a chosen risk budget by the per-unit distance between entry and stop, adjusted for the entered contract multiplier. It connects a trade plan with exposure.
Use the Position size by risk Calculator to enter your own figures and compare the result with the worked example below.
Position size by risk formula
Units = Risk budget ÷ abs(Entry price − Stop price)
Worked example
| Item | Example value |
|---|---|
| Risk budget | 100 USD |
| Entry price | 50 USD |
| Stop price | 45 USD |
| Contract multiplier | 1 multiplier |
| Position size by risk | 20 |
These are illustrative inputs, not current prices, rates or recommended targets. Where a currency is shown, keep all comparable money amounts in the same currency; conversion examples identify the two sides separately.
How to interpret the result
A stop is not a guaranteed execution price. Gaps and slippage can make actual loss exceed the planned budget.
Related calculations
Method and further reading
The example follows the FinMathly calculator method. For broader background, see Investor.gov: Leveraged investing risks. The background resource may use jurisdiction-specific terms; it does not replace the assumptions of this calculator.
Featured photograph: Pexels.