Position sizing

Position sizing decides how many shares to buy so a losing trade costs a set amount. The usual formula is shares = (account × risk per trade) ÷ (entry − stop). With a ₹5 lakh account, 1% risk, an entry at ₹500 and a stop at ₹470, you buy 166 shares.

Sizing from the stop makes every trade risk the same amount, whatever the stock's price or volatility. Many swing traders risk between 0.25% and 1% of the account on each trade, and cap any single position at a share of the account.