Why position size matters more than the stock you pick
Two people can buy the same stock on the same day at the same price, and one walks away fine while the other has a terrible month. The difference is almost never the stock. It's how much of it they bought.
If you put half your account into one name and it falls 15%, you've lost 7.5% of everything — on a single idea. Do that a few times and you're digging out of a hole that takes months to climb. Position sizing flips the question around. Instead of asking “how much do I want to buy?”, you ask “how much am I prepared to lose if I'm wrong?” and let that decide the size.
A worked example on PSX
Say your account is PKR 500,000 and you've decided no single trade should cost you more than 1% — PKR 5,000. You're looking at a stock trading at PKR 125, and you've decided that if it falls to PKR 118 your reason for buying is gone.
- Risk per share is the gap between entry and stop: 125 − 118 = PKR 7.
- Shares = money you're willing to lose ÷ risk per share: 5,000 ÷ 7 = 714.3, rounded down to 714 shares.
- That costs 714 × 125 = PKR 89,250, about 18% of the account. If the stop is hit, you lose 714 × 7 = PKR 4,998.
Notice what happened: you're putting PKR 89,250 to work but only riskingPKR 5,000 of it. Change the stop and the share count changes with it. A stop PKR 3.50 away would let you buy twice as many shares for the same risk; one PKR 14 away would halve it. That's the whole idea — the risk stays fixed, the size flexes.
How the calculator works it out
The formula is short:
shares = (account × risk%) ÷ (|entry − stop| + fees per share)
Then three practical adjustments:
- Rounded down, to whole shares or to your broker's lot size, so the loss never exceeds your limit.
- Fees counted on both sides. If you enter commission and taxes per side, the buy at entry and the sell at the stop are both included in the risk.
- Capped by what you can afford. A very tight stop can produce a share count worth more than the whole account. The calculator caps it at what you can buy without borrowing, and tells you when it has.
Mistakes this helps you avoid
- Buying a round number of shares because it “feels right”. 1,000 shares of a PKR 20 stock and 1,000 shares of a PKR 400 stock are wildly different bets.
- Moving the stop to fit the size. Decide the stop from the chart first — where the trade idea is proven wrong — then size. Never the other way round.
- Raising risk after a few losses “to win it back”.That's exactly when a streak does the most damage. The drawdown calculator shows why.
Not sure where your stop should go? The stop-loss calculator places one based on how much the stock normally moves, then sends the price straight back here.
Frequently asked questions
What percentage of my account should I risk per trade?
There's no single right number — it depends on your experience, your strategy and how much a bad month would hurt. Many traders keep it between 0.5% and 2% of the account per trade, because at those levels even a long losing streak leaves most of the account intact. The calculator shows the same trade at 0.5%, 1%, 2% and 5% so you can see the difference for yourself.
Is risk per trade the same as how much I invest?
No, and this is the most common mix-up. Risk is what you lose if the stop is hit; the position is what you spend to buy the shares. In the worked example, the position is PKR 89,250 but the risk is only about PKR 5,000, because the stop is PKR 7 below entry. A wide stop means fewer shares; a tight stop means more.
Why does the calculator round the share count down?
So the loss at your stop never goes over the amount you chose. Rounding up by even one lot would push the risk past your limit.
Does it include brokerage commission and taxes?
If you enter them. Open 'Lot size and broker fees' and type your total cost per side as a percentage of the trade value. The calculator counts fees on both the buy and the sell into the risk, so the share count shrinks a little to make room for them.
What if the stop gets skipped — a gap down at the open?
Then you lose more than planned. A stop is an instruction to sell at the next available price, not a guaranteed price. Results announcements, big news and market-wide sell-offs can open a stock well below your stop. Keeping single positions to a sensible share of the account limits how much one gap can hurt.
Can I use it for short selling?
Yes — put the stop above the entry and it sizes a short. Bear in mind short selling on PSX is restricted and not available on every account; check with your broker first.
Does Stockify save the numbers I type?
Your account size and risk % are remembered in your own browser so you don't retype them, and they also pre-fill the sizing on Stockify's signals page if you use it. Nothing is sent to our servers.
These calculators do arithmetic on the numbers you type in. They're for learning and planning, not investment advice, and they don't tell you what to buy or sell. Nothing you enter leaves your browser. See the terms & risk disclaimer.