Account size $10,000, risk limit 1% ($100) per trade, entry $50, stop $47 (a $3 loss per share). What's the maximum number of shares you can buy?
Position sizing is based on distance to your stop, not on a round share count. Your risk limit is $100 (1% of $10,000), and the loss per share is $3 (entry $50 minus stop $47). Maximum shares = risk limit ($100) รท loss per share ($3) โ 33.3, so you can buy up to 33 shares โ that way, even if you get stopped out, you only lose about 1% of your account.