Lesson 3 of 6 · Risk & Position Sizing
Position sizing math
One formula, used every time.
Shares = risk amount divided by stop distance. Your position size is the output of risk management, not a separate decision.
The formula in action.
Account $10,000. Risk 1% = $100. Entry $50, stop loss $48, stop distance $2. Shares = 100 / 2 = 50. Position value $2,500. Planned max loss $100, set before entry. Gaps and slippage can make the real loss larger.
This one is an animated diagram in the app. See it in Vero.
Change the numbers, same formula.
Account $8,000. Risk 1% = $80. Entry $20.00, stop $19.20, distance $0.80. Shares = $80 / $0.80 = 100. A wider stop on the same account cuts the share count but not the dollar risk. The dollar risk stays $80.
Account $15,000, risk 1%, entry $30.00, stop at $28.50. How many shares?
Show the answer
C. 100 shares. Risk = $150. Stop distance = $1.50. Shares = 150 / 1.50 = 100.