How to calculate a position size?

BULLSAGE Trader by MyBotIA · Published on 5 November 2026 · Educational content prepared with AI assistance, calculations checked. No personalised financial advice.

Start with the risk you accept

Before choosing a quantity, separate the available capital, the amount committed and the theoretical loss at the stop. These are three different numbers. A loss budget is a planning assumption: it is not a guaranteed ceiling in a real market.

In an educational example without leverage (borrowed money that magnifies gains and losses), for a linear asset where one unit gains or loses one euro when its price moves by one euro, the formula is: quantity = loss budget ÷ distance between entry and stop. All amounts must be expressed in the same currency.

Include costs and round down

Entry and exit fees, the spread (the gap between the buying and selling price) and slippage (the gap between the expected price and the price actually obtained) reduce the available margin. To keep a theoretical budget of €100 with a fictitious provision of €10 for total costs, the amount allocated to the price move becomes €90: 90 ÷ 5 = 18 units. If the minimum increment is one unit, a calculated quantity of 18.7 rounds down to 18, not up to 19.

This fixed provision simplifies the example. In practice, some fees depend on the quantity, the price or the holding period. Costs must be recalculated for the quantity chosen. An underestimate can lead to exceeding the budget.

A stop does not guarantee the exit price

A stop market order triggers an order when its level is reached; it can be executed at a different price. FINRA describes this risk for shares, particularly during volatile periods. A stop limit order, for its part, may remain unfilled if the limit cannot be respected. Source: FINRA, risks of stop orders.

In our 20-unit example, an exit at €93 instead of €95 produces a gross loss of €140. Fees come on top. The €100 budget was therefore not an insurance policy.

Reading the ratio without inventing a probability

With an entry at €100, a stop at €95 and a target at €110, the planned gain per unit is €10 for a theoretical risk of €5: the reward/risk ratio is 2. For fixed gains and losses of these amounts, the arithmetic break-even before fees corresponds to one winning trade in three.

This calculation says nothing about the real probability of reaching the target. Partial exits, fees and losses larger than planned change the balance. An attractive ratio does not validate a scenario.

Checks before a simulation

• Entry and stop are distinct, positive and consistent with the direction of the scenario.
• Currency, unit, minimum size and liquidity are identified.
• Estimated fees and the total exposure of other positions are taken into account.
• Data is fresh enough for the exercise; otherwise, wait.

This simple formula does not cover options, inverse contracts or all derivative multipliers. Leverage, margin and liquidation require checks specific to each instrument.

The BULLSAGE calculator applies the simple calculation before fees; it does not simulate any guarantee of execution. To test a method and record your deviations, continue with the paper trading guide.