Position Size Calculator

How position sizing works

Most traders decide how much to buy before they decide where they are wrong. Position sizing reverses that order. You first fix the rupee amount you are willing to lose on a single trade, then let the distance to your stop-loss determine the quantity. The size is an output, never an input.

The formula

There are only two steps. First, your risk budget is your account size multiplied by your risk percentage. Second, your quantity is that budget divided by the per-unit risk, which is the absolute difference between your entry price and your stop-loss price.

Quantity = (account size × risk %) ÷ |entry price − stop-loss price|

The result is always rounded down. Rounding up would push you over the risk limit you just set, so a calculation that lands on 166.7 units becomes 166. Direction does not change the arithmetic — a long with a stop below entry and a short with a stop above entry at the same distance produce the same size.

Why the stop drives the size

On a ₹5,00,000 account risking 1%, your budget is ₹5,000 per trade. Buy at ₹250 with a stop at ₹245 and the per-share risk is ₹5, so you take 1,000 shares — a ₹2,50,000 position. Widen the stop to ₹240 and the per-share risk doubles to ₹10, so the size halves to 500 shares and the position falls to ₹1,25,000. The amount at risk is ₹5,000 in both cases.

This is the whole point. A volatile stock that needs a wide stop earns a smaller position; a tight setup earns a larger one. Traders who size by a fixed rupee amount or a fixed share count instead end up risking wildly different amounts trade to trade, which is what makes a normal losing streak feel like a disaster.

One thing to watch: a tight stop can produce a position worth far more than your account. At ₹250 entry with a ₹249.50 stop, the same ₹5,000 budget calls for 10,000 shares — ₹25,00,000 of stock on a ₹5,00,000 account. The risk maths is correct, but you would need five times your capital, or margin you may not have. For cash and delivery trades the calculator flags this for you: the quantity it shows is what your risk budget allows, not what your capital covers. In F&O mode it does not, because notional exposure is not the capital actually blocked — check the margin your broker requires instead.

Lot rounding for F&O

Futures and options trade in fixed lots, so you cannot take an arbitrary quantity. The calculator first works out the raw unit count, then rounds down to a whole number of lots. Suppose you buy a NIFTY option at ₹120 premium with a stop at ₹90 — ₹30 of risk per unit. A ₹5,000 budget funds 166 units, but at a lot size of 75 that is only 2 whole lots, giving 150 units.

The consequence is that your actual risk is ₹4,500, or 0.9% of the account, rather than the full 1%. Lot rounding always leaves you slightly under budget, never over. When the budget cannot fund even a single lot the honest answer is zero — take the trade smaller elsewhere, or skip it, rather than stretching the risk rule to make it fit.

Position sizing controls risk per trade, not overall exposure. It does not account for correlation between open positions, margin requirements, or gap risk — a stop is an instruction, not a guarantee of your exit price.