R and Position Size Calculator

This free calculator answers two questions before a trade: how many shares fit your risk, and what the trade is worth in R at the stop or the target. Enter your account size, risk per trade, entry and stop, plus a target if you have one. It runs in your browser and nothing is saved or sent.

What R means

R is short for risk. It is the distance from your entry to your stop, times the number of shares you hold. In plain terms, 1R is the amount you lose if the stop hits. Buy 25 shares at 73.92 with a stop at 70.05 and your risk per share is 3.87, so 1R is $96.75.

Every result can then be written as a multiple of that risk, called an R multiple. Making twice what you risked is +2R. Stopping out as planned is -1R. Breakeven is 0R.

Why traders measure in R, not dollars

Dollars depend on account size, and percent gains depend on position size. R removes both, so it shows whether a method has an edge on its own terms. Add up the R of every trade and divide by the number of trades to get the average R per trade, also called expectancy. Above zero after costs, wins are paying for failures. Below zero, bigger positions only make bigger losses.

How to use the calculator

1. Account size. Enter the value of the account you trade from.
2. Risk per trade. The percentage of the account you accept losing if the stop hits. The dollar risk budget shows under the box.
3. Entry. The price where you plan to get in.
4. Stop. The price where the trade is wrong. Below entry means a long, above entry means a short.
5. Target (optional). Where you plan to take profit, shown in dollars and in R.

Shares are your risk budget divided by your risk per share, rounded down. Warnings appear if the stop is more than 15% away, the position is over 20% of the account, the budget buys zero shares, or the position would cost more than the account (shares are then capped).

A worked example

Say the account is $10,000 and you risk 1% per trade. The risk budget is $100.

• Entry 73.92, stop 70.05. Risk per share is 73.92 minus 70.05, or 3.87.
• Shares: 100 divided by 3.87 is 25.8, rounded down to 25 shares.
• Position cost: 25 times 73.92 is $1,848, or 18.5% of the account.
• 1R: 25 times 3.87 is $96.75. That is a little under the $100 budget because of the rounding down.
• 2R is $193.50 and 3R is $290.25.
• Target 81.66: the gain is 81.66 minus 73.92, or 7.74 per share. That is 7.74 divided by 3.87, exactly +2R, or $193.50 on 25 shares. Reward to risk is 2 to 1.

Change one value in the calculator and watch the rest move.

Shorts

For a short the stop sits above the entry and the math flips: risk per share is stop minus entry, and a target below entry is a gain. Entry 50, stop 52.50, target 45, with the same $100 budget, gives 2.50 risk per share, 40 shares, 1R of $100, and +2R ($200) at the target. The calculator labels a trade as a short when the stop is above entry, so you can catch a typo.

Why a gap can lose more than 1R

Sizing from the stop caps the planned loss, not the actual one. A stop order becomes a market order once price reaches it. If a stock closes just above your stop and opens far below it after news or earnings, the order fills near the open. With a 70.05 stop and a 63.70 open, the loss per share is 10.22 instead of 3.87: -2.64R instead of -1R.

How FinVigilante uses R

FinVigilante is a chart pattern setups letter. Every setup is published with its pattern line, trigger, stop and target, and tracked in R from the day it confirms until its stop, trailing stop, target or time limit closes it. The open setups table is updated after every market close. Wins and failures both stay in the record.

In our backtest of the letter's rules, setups averaged +0.143R each, with 36% winners. Fewer than half win, so the winners have to be larger than the failures, which is what R makes visible. A backtest uses past data and is not a promise. You can read how setups are chosen and closed on the rules page, and see the patterns we scan, such as the double bottom and the inverse head and shoulders.

FAQ

What is 1R in trading?

1R is the amount you lose if your stop is hit. It equals entry minus stop, times the number of shares. If you buy 25 shares at 73.92 with a stop at 70.05, 1R is 3.87 times 25, or $96.75.

How many shares should I buy with a stop loss?

A common method is to divide your risk budget by your risk per share and round down. With a $10,000 account and 1% risk, the budget is $100. With a stop $3.87 below entry, $100 divided by 3.87 is 25.8, so 25 shares.

What is a good risk to reward ratio?

There is no single right number, because reward to risk only means something next to a win rate. At 2 to 1, a trade needs to win more than about one time in three to break even before costs.

Why measure results in R instead of dollars or percent?

R makes trades comparable. A $50 loss in a small account and a $500 loss in a large one are both -1R if each hit its stop. Measuring in R shows whether a method works, separately from how much money was put behind it.

Can I lose more than 1R?

Yes. A stop is an order, not a guarantee. If a stock gaps below your stop overnight, the order fills at the next available price, which can be far worse. Slippage, fees and position size caps also change the final result.

Does this calculator work for short trades?

Yes. Enter a stop above your entry and the calculator sizes the trade as a short. Risk per share becomes stop minus entry, and a target below entry is shown as a positive R multiple.

To see R in practice, the free Sunday recap walks through the week's setups, including the ones that failed, with every result in R. Read it at finvigilante.com.

Educational content. Not advice. FinVigilante does not know your situation, and every trade decision is your own.