Calculator
20.0000 units
$100.00 paper risk
Tool
Position size calculator for paper trading
Calculate an educational paper-trading position size from account size, risk percent, entry price, and stop price. Use the result for review, not live allocation advice.
Formula
Paper risk amount equals account size times risk percent. Unit size equals paper risk amount divided by the distance from entry to stop.
This educational calculation excludes fees, slippage, leverage, liquidity, taxes, and probability. It is not financial advice.
How to use the result in a review
The number from the calculator is only useful if it becomes part of the paper-trading record. Add it to the trade entry checklist, compare it with the agent risk limits, and check it again during the post-trade review. If a simulated trade ignores the planned size, the review should classify that as a process issue even if the outcome was profitable.
| Input | What it means | Review risk |
|---|---|---|
| Paper account size | The simulated account value used for practice. | Changing this too often makes results hard to compare. |
| Risk percent | The percent of the paper account you are willing to lose if invalidation is hit. | Higher risk percent can make drawdown look better or worse than the rule actually allows. |
| Entry price | The planned simulated entry level. | Using an after-the-fact entry destroys review quality. |
| Stop price | The invalidation level used for sizing. | A stop that is too tight or too loose changes the size materially. |
Example
Paper account: $10,000
Risk: 1 percent, or $100 of simulated risk
Entry and stop: Entry at $100 and stop at $95 gives $5 of risk per unit, so the calculated paper size is 20 units.
Use in workflow
Add the calculated size to the trade entry checklist, then review actual behavior in the risk review workflow. Pair it with the risk-reward calculator for a more complete paper entry note.
Review checklist
- Was the paper account size consistent with the rest of the journal?
- Was the risk percent chosen before the setup was evaluated?
- Does the stop price match the written invalidation?
- Would the same calculation be used for the next similar paper setup?
Common sizing mistakes
Changing the paper account size mid-test makes results harder to compare. Moving the stop after calculating the position makes the review unreliable. Using the same unit size for every setup ignores the fact that different stop distances create different risk.
The calculator is most useful when it is part of a consistent workflow, not a one-off number copied into a journal after the outcome is known.
Sanity checks before saving
A position size calculation should be saved only after the setup and invalidation are already written. If the stop is moved just to make the number look better, the paper trade is no longer testing the original idea. If the risk percent changes after seeing the chart, the review should mark that as a process issue.
Use the calculator as a consistency check across the journal. The same setup type should use the same sizing logic unless the written rule explains why the test changed.
Also compare the result with open paper exposure. A size that looks reasonable alone can be too large when the agent already has correlated simulated positions in the same market narrative.
When the calculator says no
- The stop distance makes the paper size too large for the rule.
- The setup needs a wider invalidation level than planned.
- The calculated size would add too much correlated paper exposure.
- The entry exists before the risk boundary is clear.
In those cases, the useful output is not a smaller number copied into the journal. The useful output is a decision to revise the setup, wait for a clearer invalidation level, or skip the simulated entry.
That decision is part of risk management too.
FAQ
How is paper-trading position size calculated?
Paper risk amount equals paper account size multiplied by risk percent. Position size equals paper risk amount divided by the distance between entry and stop.
Can this calculator be used for live trading?
This calculator is educational and intended for paper-trading review. It does not account for live execution, fees, liquidity, leverage, taxes, or personal financial circumstances.
What if the calculated paper position size looks too large?
Treat that as a review signal. Recheck the stop distance, risk percent, and setup quality before recording the simulated entry, and reduce or skip the paper trade if the rule no longer fits.
Important limitation
Position sizing is only one part of risk review. It does not prove a setup has positive expected value and does not make a live trade appropriate.