Definition
A common guideline is to risk a small fixed share of the account, often 1% to 2%, on any one trade. The size follows from the distance between your entry and your stop, so a wider stop means a smaller position.
Formula
Shares = (account size x risk %) / (entry price - stop price)
Watch out for
This is a risk-control method, not a prediction of results. Gaps can take price through a stop.
Example
Hypothetical exampleWith a $10,000 account risking 1% ($100), an entry at $50 and a stop at $48, risk is $2 per share, so the position is 50 shares.