Position Sizing Lab
Decide the rupee risk first,find the stop-loss distance second, calculate shares last.
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Sign inThis Lab works out how many shares to buy so that a losing trade costs you only the amount you decided in advance. You set your trading capital, the share of it you are willing to risk, your entry price, how far below it the stop-loss sits, and how far above it the target sits. The Lab then shows the position size, the money tied up, the money at risk, and the risk-reward ratio.
How to use this Lab
- Set your trading capital, from ₹50,000 to ₹10,00,000.
- Set the risk per trade as a percentage of capital, from 0.5 to 3 percent.
- Set the entry price and the stop-loss distance below it. The stop-loss is the price at which you would exit with a loss.
- Set the target distance above the entry.
- Read the position size first, then the capital deployed, the capital at risk, and the risk-reward ratio.
What to notice
- Decide the rupee risk first
- The Lab works in a fixed order: the rupee risk, then the stop-loss distance, then the number of shares. It never works backward from how much money happens to be in the account.
- A wider stop means fewer shares, not more risk
- Widen the stop-loss distance and watch the share count shrink, so the rupee risk stays exactly the same. Safety comes from a constant rupee risk, not from how wide or narrow the stop is.
- Money tied up is not money at risk
- Capital deployed can be large while capital at risk stays small. These are two different numbers, and mixing them up leads to wrong decisions in both directions.
Three runs of the Lab (hypothetical)
With ₹5,00,000 capital, 1 percent risk, an entry of ₹500, a stop-loss ₹20 below and a target ₹60 above: you risk ₹5,000, so you buy 250 shares. You tie up ₹1,25,000, and if the stop-loss hits you lose ₹5,000. The risk-reward ratio is 1 : 3.0.
Widen the stop-loss to ₹40 below the entry: the position drops to 125 shares and ties up ₹62,500. You still lose ₹5,000 if the stop-loss hits, but the risk-reward ratio falls to 1 : 1.5.
Raise the risk to 2 percent with the original stop: you risk ₹10,000, so you buy 500 shares, tying up ₹2,50,000.
What this Lab does not show
- The Lab assumes your stop-loss order fills at the price you set. In a fast market or a sharp overnight gap it can fill worse, so the real loss can be larger than the risk shown.
- It uses whole shares only, and it does not include brokerage, taxes or other charges.
- The risk-reward ratio compares the size of the bet, not the odds of winning it. A high ratio does not make a trade likely to work.
- It does not recommend any risk percentage, stop-loss or trade. Maetis does not give trading advice.
Common questions
- What is position sizing?
- Choosing how much to put into one trade so that a loss, if the stop-loss hits, is an amount you decided in advance.
- How do you calculate position size?
- Divide the rupee amount you are willing to lose by the stop-loss distance per share. The result is the number of shares.
- What risk per trade should I use?
- The Lab does not suggest one. It lets you see how a smaller or larger percentage changes the position and the money at risk.
- What is a risk-reward ratio?
- The distance to your target divided by the distance to your stop-loss. It compares what you risk with what you could gain, not how likely either is.