Calculator · Swing Trading

Position size calculator

Enter your account size, the percent of it you accept losing, and the entry and stop. The position size comes out in shares, with the position value, the reward in R if you add a target, and the loss if the stock opens past your stop.

Your numbers

Below the entry for a long, above it for a short.
How far beyond the stop the stock might open.

Shares

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Position value

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Reward : risk

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Loss on the gap

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The working

    Shares come from the stop

    Pick the price where the setup is wrong, measure its distance from the entry, and divide the dollars you accept losing by that distance. At $30,000 and 1% the dollar risk is $300. A $2.50 stop distance allows 120 shares. Widen the stop to $5 and the same $300 buys 60 shares, so the loss at the stop is the same in both cases. That is why the share count comes from the stop. Average true range gives a measure of normal daily movement to set the stop beyond.

    Longs, shorts and R

    A stop below the entry reads as a long. A stop above it reads as a short. The same formula covers both because the distance is taken as an absolute value. A target turns into R: the reward per share divided by the risk per share. A $57.50 target on a $50 entry with a $2.50 stop is 3R. Below 1R, you need to win more than half your trades to break even.

    Where the stop fails

    A stop order becomes a market order once it triggers. If the stock opens past the stop after an earnings report or a weekend, the fill comes at the open, and the loss is the full stop distance plus the gap. The gap line prices that case. On the default figures a $1.50 gap turns a $300 loss into $480, which is 1.6R. The earnings gap case study follows one trade through a report. How to start swing trading with a small account covers sizing when the account is small, and the swing trading desk has the rest.

    Questions about this calculator

    Are commissions and slippage included?

    No. The share count uses the entry and stop prices exactly as entered. If your broker charges per share, or the stock trades with a wide spread, add that cost to the stop distance before you size the trade, so the dollar loss at the stop stays at the figure you chose.

    What if the position is bigger than my account?

    A tight stop combined with a large risk percent can call for more shares than your cash covers. That trade needs margin. The usual fixes are a lower risk percent, a wider stop placed where the setup is actually wrong, or taking fewer shares than the formula gives and accepting a smaller dollar risk.

    How do I size a short sale?

    Enter the stop above the entry and the target below it. The risk per share is still the distance between entry and stop, so the share count comes out the same way. Shorts carry costs a long does not, such as borrow fees and any dividend owed to the lender while the position is open, and a gap up through the stop is the same risk in the other direction.

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