Position Sizing — How Much to Buy
The professional method for calculating exactly how many shares to buy so you never risk more than you planned.
The core principle
Position sizing answers the question: "How many shares should I buy?" The answer is not based on how confident you are — it is based on how much you are willing to lose if the stop is hit.
The formula
Shares = (Account Size × Risk %) ÷ (Entry Price − Stop Price)
Example: $10,000 account, 1% risk = $100 max loss. Entry $50, Stop $48 = $2 risk per share. Shares = $100 ÷ $2 = 50 shares.
Why 1–2% per trade
Risking 1% per trade means you can lose 10 trades in a row and still have 90% of your account. This gives you enough runway to survive a losing streak and still recover. Risking 10% per trade means five losses wipe out half your account.
High confidence ≠ larger position
A common mistake: doubling the position size on a high-confidence signal. Confidence scores reflect probability, not certainty. Every signal can lose. The 1–2% rule must be applied consistently regardless of confidence.
On TradeMind AI
Every signal card includes a built-in position sizer. Enter your account size and risk percentage, and it calculates the exact share count for you. The calculation respects the signal's specific entry and stop prices.
See it in action
Every TradeMind AI signal shows confidence score, entry, stop, target, and R-multiple — all explained with tooltip hints when you hover the term.