How Position Size Works

1. 1

   Set Your Loss Limit

   Capital × the percentage you will risk. ৳5,00,000 × 1% is ৳5,000, the most you accept losing on this trade.

2. 2

   Measure the Stop Distance

   Buy price − stop-loss price. Buying at ৳100 with a stop at ৳95 puts ৳5 at risk on every share.

3. 3

   Divide

   Loss limit ÷ distance. ৳5,000 ÷ ৳5 is 1,000 shares, which cost ৳1,00,000, or 20% of your capital.

Example: with ৳5,00,000 and a 1% loss limit, buying at ৳100 with a stop at ৳95 gives 1,000 shares. If the stop is hit you lose about ৳5,000. If you set the stop at ৳90 instead, the same limit allows only 500 shares.

Position Size Questions

What is position sizing?

It means deciding how many shares to buy based on how much you are willing to lose, not just how much you would like to invest. A wider stop-loss means fewer shares for the same loss limit.

How much of my capital should I risk on one trade?

There is no single right answer. It depends on your goals and how much loss you can accept. Many investors choose a small percentage so that a run of losing trades does not do serious damage. This calculator shows what any figure you choose means in shares and Taka. It does not suggest one.

How many shares should I buy?

The calculator shows the number that fits the loss limit and stop-loss you enter. Whether to buy at all is your decision, and this is not investment advice.

What is a stop-loss?

A stop-loss is a price at which you plan to sell to limit a loss. QuickTrade Pro offers a Stop Loss order type that places this instruction in advance.

Is a stop-loss guaranteed?

No. If the price jumps past your stop, or trading is limited by daily price limits or a lack of buyers, your shares may sell at a worse price or not sell at all. The loss can be larger than the figure shown.

Why is the number of shares lower than I expected?

The calculator buys whole shares only, and never more than your capital can pay for. If your capital is the limit, the loss if stopped out will be smaller than your loss limit.

What does reward compared with risk mean?

It compares the gain if your target is reached with the loss if your stop-loss is hit. A target ৳10 above and a stop ৳5 below the buy price is 2 times the risk. It says nothing about how likely either outcome is.

Does the result include fees and charges?

No. Trading fees and charges make a loss slightly larger and a gain slightly smaller.

Quick Glossary

Position Size

The number of shares you buy in one trade.

Stop-Loss

A price at which you plan to sell to limit a loss.

Loss Limit

The most you are willing to lose on one trade, as a percentage of your capital.

Reward Compared With Risk

The gain at your target divided by the loss at your stop-loss.

Take Profit

A price at which you plan to sell to lock in a gain. QuickTrade Pro offers a Take Profit order type.