Key Takeaway
Position sizing determines how much capital to allocate per trade. The 2% rule suggests risking no more than 2% of your total portfolio on any single trade to prevent catastrophic losses.
Position Sizing Calculator
Calculate optimal trade quantity based on your risk budget.
Optimal Position Size (Shares)
400
Total Capital Risked
₹2,000
Total Trade Exposure
₹60,000
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Frequently Asked Questions
Why is position sizing important?
Position sizing dictates how many shares you buy. It ensures that even if your stop loss is hit, your total account loss stays within your predefined risk limit (e.g., 1%).
Should I risk the same percentage on every trade?
Generally, yes. Consistently risking 1% to 2% of your account per trade ensures that a string of losses will not wipe out your trading capital.
How does volatility affect position sizing?
Highly volatile stocks require wider stop losses. With a wider stop loss, your position size must be smaller to maintain the same total risk amount.
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