Professionals don't decide how many shares to buy — they decide how much to risk, and let the share count follow. Enter your numbers and get the exact position size where one adverse outcome costs only what you planned.
"I'll buy 100 shares" treats every stock as equally risky — but a 100-share position in a calm utility and in a volatile growth name carry wildly different risk. Risk-first sizing inverts the question: fix the dollar amount a single position may cost you, measure the distance to your exit level, and derive the share count. Every position then contributes a similar, survivable amount of risk regardless of how volatile the underlying stock is.
shares = (account × risk%) ÷ (entry − exit)
Example: a $50,000 account risking 1% has a $500 risk budget. Entering at $100 with an exit at $96.40 risks $3.60 per share, so the position is 138 shares (~$13,800). If the exit needs to be wider — say $94 for a more volatile name — the same $500 budget buys only 83 shares. Wider distance, smaller size, identical risk.
Decide the dollar amount you are willing to risk (account size × risk percentage), then divide it by the per-share risk (entry price minus exit level). The result is the number of shares where hitting your exit costs exactly your planned risk — no more.
A widely cited professional convention is 0.5%–2% of account value per position. At 1%, it takes a streak of dozens of consecutive losses to seriously impair an account — which is the point: sizing exists to make any single outcome survivable.
Total risk = shares × per-share distance. If the exit is placed further away (for example to sit outside a volatile stock's normal daily range), the per-share distance grows, so the share count must shrink to hold total dollar risk constant.
No. It performs arithmetic on numbers you choose. It is an educational tool from a financial publisher, not a recommendation to buy or sell any security.
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