Position size
Also called: position sizing, risk per trade, 1 percent rule
The number of shares held in a trade, calculated so that the loss at the stop equals a fixed small share of capital.
Position size = rupee risk ÷ (entry price − stop price + costs per share). The stop distance decides the size: a wider stop means fewer shares. Gaps and thin liquidity can still make the actual loss larger than planned.
Example
Risking ₹5,000 with an entry at ₹310 and a stop at ₹298 allows about 416 shares, or 400 after costs of ₹0.50 a share.
Learn more in these lessons
- Risk/reward and position size per tradeHow many shares should you buy, and what does risk/reward mean?
- Position sizing and concentrationHow much of your portfolio should you put in any one investment?
Related terms
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