Position Size Calculator
Risk management is a crucial concept every successful investor should champion. And it all starts with proper position sizing. Position sizing is vital to managing risk and avoiding the total destruction of your portfolio with a single trade. Our calculator will help you define the proper amount of shares to buy or sell in order to maximize your return and limit your risk.
The Oxford Club (the publisher of Investment U) recommends putting no more than 4% of your equity portfolio in any single stock. And its policy is to never let a stock fall more than 25% below the purchase price without selling it. On top of that, we recommend a 25% trailing stop. That way if you take a maximum loss of 25% on your maximum position size of 4%, the value of your portfolio has fallen only 1%.
Of course, there is more to risk management than just position sizing (this includes proper stock selection and asset allocation). Learn more about how you can maximize your returns and limit your risk here.
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