Why does a tighter stop mean a bigger position?

Because the money at risk is fixed. If each share can only lose you one rupee rather than ten, you can hold ten times as many for the same total loss.

What is an R multiple?

One R is the amount you risked. A trade that makes twice what it risked is a 2R trade, which lets you compare outcomes across positions of very different sizes.

Investmenttrading

Position Size & Risk Calculator

How many shares to buy so that hitting your stop costs a fixed share of the account. Position size is the risk decision; the entry is not.

Also called: risk per trade calculator, lot size calculator.

Shares to buy

500

500 shares, a position of ₹1,25,000. If the stop is hit you lose ₹5,000, which is 1% of the account exactly as intended.

Amount at risk

₹5,000

Risk per share

₹10

Position value

₹1,25,000

Position as a share of the account

25%

Target for a 2R trade

270

How this is calculated

An estimate, not an offer or a guarantee. Projected returns assume the rate you entered holds for the whole term, which no market does.

Method and background

This is what the calculation gives for the numbers you entered. It is an estimate, not advice, and it knows nothing about your situation beyond those numbers. Rules for India change on a published schedule; the effective date is shown on every rule-based tool.

How this is calculated

Decide what a losing trade may cost, in money, before deciding how much to buy. The distance from entry to stop is the risk per share, so dividing the money you are willing to lose by that distance gives the position size. A tighter stop allows a larger position for the same risk, which is the relationship most people have backwards.

shares = (account * risk per trade) / (entry price - stop price)

A: Account size (currency)
r: Risk per trade (decimal)
P_e: Entry price (currency)
P_s: Stop price (currency)

Worked examples

Each of these is asserted on every build. If a change to the engine ever moved one of these answers, the build would fail before the page could print it.

one percent of a five lakh account

Account size: ₹5,00,000
Risk per trade: 1%
Entry price: 250
Stop loss price: 240

Shares to buy500

5,000 of risk over 10 per share, worked by hand

Open this example

a tighter stop allows a larger position

Account size: ₹5,00,000
Risk per trade: 1%
Entry price: 250
Stop loss price: 248

Shares to buy2,500

boundary: the risk is unchanged while the size multiplies

Open this example

Method and limits

What it assumes

The stop is honoured at the price set, which a gap can prevent.

What it deliberately does not model

It does not account for slippage or for a gap through the stop, both of which make the realised loss larger.
A position sized this way can still exceed sensible concentration limits, so the position share of the account is shown too.

Formula version 1.0.0 · definition 1.0.0 · India · Report a problem with this calculator

Frequently asked questions

Why does a tighter stop mean a bigger position?: Because the money at risk is fixed. If each share can only lose you one rupee rather than ten, you can hold ten times as many for the same total loss.
What is an R multiple?: One R is the amount you risked. A trade that makes twice what it risked is a 2R trade, which lets you compare outcomes across positions of very different sizes.