Question 1

How do I calculate stock position size?

Accepted Answer

Formula: Shares = (Account Size × Risk %) ÷ (Entry Price − Stop Loss Price). Example: $50,000 account, 1% risk ($500), entry $100, stop $95 ($5 below). Shares = $500 ÷ $5 = 100 shares. Maximum loss if stopped out = 100 × $5 = $500 = 1%.

Question 2

Should I include commissions in stock position sizing?

Accepted Answer

For modern commission-free brokers (common in the US market) this is not a significant concern. For brokers that charge per-trade or per-share commissions, factor those costs into your risk amount. Commissions reduce effective R:R especially on small accounts.

Question 3

Does position sizing apply to ETFs the same way?

Accepted Answer

Yes — ETFs are priced per share like stocks and the same formula applies. ETFs typically have lower volatility than individual stocks, so stop distances may be tighter, allowing slightly larger share counts for the same risk amount.

Question 4

What stop loss strategy works best for stocks?

Accepted Answer

Common approaches include: (1) Fixed percentage stop (e.g. 5–8% below entry), (2) Below a key support level, (3) ATR-based stop at 1–2× ATR below entry. The best stop is one you identified before entering the trade, based on technical levels rather than your pain tolerance.

Stock Position Size Calculator