Position Sizing For Beginners The 1% RuleBank of America CorpBATS:BACBlueBeckMost new traders decide how many shares to buy by asking "how much can I afford?" That's the wrong question, and it's the one that ends accounts. The right question is: how much am I willing to lose if I'm wrong? The rule Risk no more than 1% of your account on any single trade. Not 1% of the position — 1% of the whole account. The math Say you have a $10,000 account. One percent is $100. That's your maximum loss on this trade. You've found a setup at $50, and the level where you're wrong — below the swing low — is $47. Your stop distance is $3 per share. $100 ÷ $3 = 33 shares. That's your position. Not 100 shares because they're "cheap," not 200 because you feel good about it. Thirty-three, because that's the number where being wrong costs you $100. What this buys you A string of losses stops being fatal. Lose five in a row at 1% and you're down about 5% — annoying, survivable, and you still have a full account to trade with. Size by gut instead and five losses can take a third of it. One thing to watch When your stop is very tight, the math will hand you a share count that costs more than you have. If 33 shares at $50 is $1,650, fine. But a fifty-cent stop on the same trade says 200 shares — $10,000, your whole account. Risk-based sizing doesn't know about your cash. Cap it at what you can actually pay for. The 1% rule isn't about being timid. It's about staying in the game long enough for your good trades to matter. Educational only — not financial advice.