How to calculate position size from your stop-loss

CoTrading editorial team 2026-09-23

Position size is the quantity you can hold so that being stopped out costs a fixed amount you decided on in advance. The whole calculation is three lines:

risk amount   = balance × risk %
stop distance = |entry − stop|
position size = risk amount ÷ stop distance

This page walks through those lines by hand, turns the result into an order the exchange will accept, and shows how to check it. The arithmetic is exactly what the position size calculator does, so you can compare your working against it. If you are still deciding which sizing method to use, that is covered in position sizing methods compared; this page assumes fixed fractional sizing and is about getting the number right.

Before you start

You need four numbers, and the order you get them in matters:

The stop price. Where the trade idea is wrong — from the chart, not from the size you would like to hold. See how to choose a stop-loss level.
The entry price. The price you expect to be filled at, not the last trade you happened to see.
The balance you size against. Decide once whether that is the whole account or a dedicated trading sub-account, and use the same one every time.
The risk percentage. Your choice. This page does not tell you what it should be; what different choices do to an account over a losing streak is in risk of ruin.

If you trade contracts rather than the asset itself, you also need the instrument’s contract size and quantity step from the venue’s contract specifications.

Step 1: Turn the percentage into a currency amount

Example inputs (the calculator’s defaults, not a recommendation): a balance of 10,000 USD and a risk of 1%.

risk amount = 10,000 × 0.01 = 100 USD

This is the number that matters. The percentage was only a way to arrive at it, and every later step is measured against it.

Step 2: Measure the stop distance in price

A long entered at 60,000 with a stop at 58,800:

stop distance = |60,000 − 58,800| = 1,200   (2.0% of entry)

Take the absolute value and the formula works for shorts without change — a stop above the entry gives a positive distance the same way.

Step 3: Divide

position size = 100 ÷ 1,200 = 0.08333 units

“Units” means units of whatever the price is quoted per. If 60,000 is the price of one BTC, the answer is 0.08333 BTC. If you mix units here — a price per coin with a quantity in contracts — the answer will be wrong by the contract size.

Step 4: Derive notional and leverage

Both are outputs. You did not choose them; the stop and the risk amount did.

notional        = 0.08333 × 60,000  = 5,000 USD
leverage needed = 5,000 ÷ 10,000    = 0.5×

A shortcut worth remembering for sanity checks: notional = risk amount ÷ stop %. Here 100 ÷ 0.02 = 5,000, which you can do in your head before touching the order ticket.

This position needs no leverage at all. If you open it on a perpetual at 10× anyway, you post 500 of margin instead of 5,000 — and the loss at the stop is still 100, as leverage is not risk explains. What leverage does change is where liquidation sits, so check that it lies beyond your stop with the leverage and stop-loss table or the rule in max leverage for a stop distance.

Step 5: Convert to an order the venue accepts

Two conversions, both of which go wrong quietly.

Contracts. If one contract represents a fixed quantity of the asset, contracts = units ÷ contract size. With an illustrative contract size of 0.001 BTC: 0.08333 ÷ 0.001 = 83.33, so 83 contracts. Inverse contracts are denominated in the quote currency and settle in the coin, so this conversion does not carry over directly — see inverse vs linear contracts.

Quantity step. Round down to the venue’s step size. With an illustrative step of 0.001, the order is 0.083 units, and the loss at the stop becomes 0.083 × 1,200 = 99.60. Rounding up to 0.084 gives 100.80 — small here, but on a small account or a coarse step the overshoot can be a large fraction of the budget. If the rounded-down size is below the venue minimum, the trade does not fit your risk budget at all; see symbol filters and minimum order sizes.

A short, worked the same way

Example numbers only: short at 2,500, stop at 2,575, balance 5,000, risk 2%.

Step	Calculation	Result
Risk amount	5,000 × 0.02	100 USD
Stop distance	\|2,500 − 2,575\|	75 (3.0%)
Position size	100 ÷ 75	1.3333 units
Notional	1.3333 × 2,500	3,333.33 USD
Leverage needed	3,333.33 ÷ 5,000	0.67×

Shortcut check: 100 ÷ 0.03 = 3,333.33. It matches.

How to tell it worked

Multiply back. Final order size × stop distance should be at or just under the risk amount: 0.083 × 1,200 = 99.60, which is under 100. If the product is above your risk amount, something was rounded up or the stop moved after you sized.

Cross-check the notional. Risk amount ÷ stop percentage should give the same notional as quantity × entry.

Then account for costs. The formula excludes fees. With a 2% stop and an illustrative 0.05% taker fee on each side, the same 0.08333 units actually lose about 104.95 at the stop, not 100. The adjusted formula is in position size including fees.

What usually goes wrong

1. Sizing the margin instead of the position. “Risk 1%” turns into “put 1% of the account in”. At 10×, 100 of margin controls 1,000 of notional, and a 2% stop costs 20 — a fifth of the plan. The opposite version is more dangerous: 1,000 of margin at 10× is 10,000 of notional, and the same stop costs 200, double the plan. The formula sizes the position; margin follows from whatever leverage you then set.

2. Reading the stop percentage as account risk. A 2% stop is 2% of the price, not 2% of the account. The two are only equal when the position is exactly the size of the account.

3. Moving the stop without resizing. Widen the stop in the example from 58,800 to 57,600 and keep 0.08333 units, and the loss at the stop is 200. Any time the stop moves, the size is recomputed — this is one of the quieter ways position sizes drift upward.

4. Forgetting the contract size. Entering 83 as the quantity when the field expects coins rather than contracts, or the reverse. An order a thousand times too large may be rejected for insufficient margin; do not rely on it.

5. Treating each trade as the whole picture. The formula bounds one trade. Ten stopped-out trades in a day are ten times the risk amount, which is why a separate limit is needed — see risk per trade vs risk per day.

FAQ

What is the formula for position size?

Position size equals the risk amount divided by the stop distance, where the risk amount is your balance times the percentage you chose to risk and the stop distance is the absolute difference between entry and stop prices. For a 10,000 balance, 1% risk, entry 60,000 and stop 58,800, that is 100 ÷ 1,200, or 0.0833 units.

How do I calculate position size with leverage?

The same way — leverage does not appear in the formula. Size the position from the risk amount and stop distance, then divide the notional by your balance to see what leverage it requires. Setting a higher leverage only reduces the margin you post; it does not change the loss at the stop, though it does move the liquidation price closer.

How do I convert position size into contracts?

Divide the position size in units of the asset by the contract size the venue specifies, then round down to the quantity step. For example, 0.0833 units with a contract size of 0.001 is 83 contracts. Inverse contracts are quoted differently and need their own conversion.

Should I round position size up or down?

Down, always. Rounding up means a stop-out costs slightly more than the budget you set, and on a small account or an instrument with a coarse quantity step that overshoot can be significant. If rounding down takes the size below the venue’s minimum order, the trade does not fit your risk budget.