KovaView Guide · Position Sizing
How to size a stock position before the trade
Position sizing turns a trade idea into a defined commitment. Before an order, you can translate account size, target position weight, entry price, and stop price into a whole-share plan, then inspect how much of the account would be at risk if the stop were reached.
Start with two separate limits
A position can be constrained by how much capital you want to allocate and by how much you could lose at the planned stop. These are related, but they answer different questions. A target weight asks, “How large should this holding be?” A stop-based risk budget asks, “How many dollars could be lost if price moves from entry to the stop?” Keeping both visible prevents a small-looking position from hiding a wide stop, or a tight stop from quietly producing an oversized holding.
Calculate the weight-based plan
First convert the target percentage into dollars. Multiply the account total by the target position percentage, divide that budget by the entry price, and round down to a whole share:
Rounding down matters because the plan does not use fractional shares. After rounding, multiply the share count by entry price to see the actual position value and divide it by account total to see the actual weight. The actual percentage can be slightly below the target because a fraction of a share was discarded.
Estimate risk at the stop
For a long trade with a stop below entry, the planned loss per share is entry minus stop. Multiply that distance by planned shares to estimate dollar risk. Divide the result by account total to express it as a percentage:
estimated risk = shares × (entry price − stop price)
account risk % = estimated risk ÷ account total × 100
This is a planning estimate, not a guaranteed maximum loss. It assumes an exit at the entered stop. Gaps, slippage, fees, liquidity, and order execution can change the realized result.
Worked example
Consider a $50,000 account, a 10% target position, a $125 entry, and a $117.50 stop. The target allocation is $5,000. Dividing $5,000 by $125 produces 40 whole shares, so the planned position value is $5,000 and its actual account weight is 10%.
The distance from entry to stop is $7.50 per share. At 40 shares, estimated risk is $300, or 0.6% of the account. A separate reverse calculation can show the share count associated with a 1% account-risk reference: 1% of $50,000 is $500, and $500 divided by $7.50 rounds down to 66 shares. That does not make 66 shares a recommendation. At the same entry, 66 shares would use $8,250, or 16.5% of the account, which exceeds the 10% target. The two outputs expose the trade-off; your rules determine the decision.
Use the result as a pre-trade check
Review the inputs before acting: the correct ticker, current account total, intended weight, editable entry, and a stop that belongs to the setup rather than a number chosen to force a preferred share count. Then compare planned shares, position value, actual weight, estimated stop loss, and the separate risk-budget share limit. If the outputs conflict with your rules, change the trade plan or pass on the setup instead of hiding the conflict.
KovaView provides this calculation as research and decision support. It does not place the trade, predict the outcome, or remove market risk. The calculator is one step in a disciplined process: screen for candidates, research the setup, define the trade, size it, and review the result afterward.