Position Size & Risk/Reward Calculator
Work out how many shares or lots to trade based on your capital and how much you're willing to risk, then see your risk/reward ratio and the win rate you'd need just to break even.
A worked example
Say you have ₹1,00,000 of capital and risk 1% on a trade, so ₹1,000. You plan to buy at ₹100 with a stop-loss at ₹95, which risks ₹5 a share, so you can buy ₹1,000 ÷ ₹5 = 200 shares, a position of ₹20,000 or 20% of your capital. A target of ₹115 earns ₹15 a share, ₹3,000 in total, a risk to reward of 1 : 3. At that ratio you only need to win 25% of your trades to break even, which is 1 ÷ (1 + 3).
Understanding the calculation
- Risk-based position sizing
- Instead of picking a quantity first and hoping for the best, you decide the rupee amount you're willing to lose on this one trade, then size the position so hitting your stop-loss costs exactly that, no more.
- Risk/reward ratio
- How much you stand to gain for every rupee you're risking, based on your entry, stop-loss and target. A 1:3 ratio means three rupees of potential reward for every rupee at risk.
- Breakeven win rate
- Risk divided by (risk plus reward), as a percentage. It's the minimum win rate, at this exact ratio, needed to come out even before charges over many trades. A better ratio needs a lower win rate to be profitable.
- Lot size
- For F&O, quantity is rounded down to the nearest whole lot using this field, since fractional lots can't be traded. Leave it at 1 for equity delivery.
Common questions
How is position size calculated from risk?
You decide how much money you're willing to lose on the trade (your capital times your risk percentage), then divide that by how much you'd lose per share or unit if your stop-loss is hit. The result is how many units you can hold without risking more than you intended, regardless of how big the position looks in total value.
What does a risk/reward ratio of 1:3 mean?
For every rupee you're risking if the stop-loss is hit, you stand to make three rupees if the target is hit. A higher ratio means you can be right less often and still come out ahead over many trades.
What is the breakeven win rate?
The minimum percentage of trades you'd need to win, at this exact risk/reward ratio, just to come out even before charges. It's calculated as risk divided by (risk plus reward). At 1:3, that's 25%: win one in four trades at this ratio and you break even; win more often and you're ahead.
Why is there a lot size field?
Futures and options can only be traded in fixed lot sizes set by the exchange, not single units. Enter your contract's lot size and the calculator rounds your position down to the nearest whole lot instead of a raw share count. Leave it at 1 for equity delivery, where you can hold any whole number of shares.
Does this account for brokerage and other charges?
No, this is pure position sizing and risk math based on your entry, stop-loss and target. Use the Brokerage & Tax Calculator alongside this one to see what the actual trade costs and your true breakeven price after charges.