Enter the factors such as available capital, stock price, and the percent of capital you want to allocate into the calculator to determine the stock lot size (number of shares).
Stock Lot Size Formula
The following equation is used to calculate the Stock Lot Size (shares) based on a chosen capital allocation percentage.
SLS = (AC * (DR/100)) / SP
- Where SLS is the stock lot size (shares)
- AC is the available capital ($)
- DR is the desired capital allocation (%)
- SP is the stock price ($ per share)
To calculate the stock lot size, multiply the available capital by the allocation percentage (as a decimal), then divide by the stock price. This determines how many shares you can buy if you plan to invest that portion of your capital in the stock.
What is a Stock Lot Size?
Definition:
A stock lot size can refer to either (1) a trading convention such as a round lot (often 100 shares for U.S.-listed stocks) versus an odd lot (any amount not equal to a round lot), or (2) more generally, the position size—the number of shares you choose to buy or sell. This calculator uses the second meaning: it estimates the number of shares based on your available capital, the share price, and the percent of capital you want to allocate to this trade.
How to Calculate Stock Lot Size?
Example Problem:
The following example outlines the steps and information needed to calculate the Stock Lot Size.
First, determine your available capital. In this example, the user has $5,000 to invest.
Next, determine the capital allocation percentage, which is 2% (0.02). This means the user plans to allocate $100 (2% of $5,000) to this purchase.
Then, identify the stock price. In this example, the price is $100 per share.
Finally, calculate the stock lot size using the formula above:
SLS = (AC * (DR/100)) / SP
SLS = (5000 * (2/100)) / 100
SLS = 1 share
FAQ
How does the allocation percentage affect stock lot size?
The allocation percentage determines how much of your available capital you plan to invest in this particular stock. A higher allocation percentage increases the dollar amount invested and typically increases the number of shares you can buy at a given share price. (Note: this is different from “risk per trade” sizing based on a stop-loss, which requires knowing the potential loss per share.)
Should I always invest all available capital in one stock lot?
It’s generally prudent to diversify your investments rather than putting all your available capital into a single stock. Considering multiple stocks or assets can help spread out risk and keep your portfolio balanced.
How often should I recalculate my stock lot size?
You should consider recalculating lot sizes whenever your available capital, stock price, or your intended allocation percentage changes. Regular reviews help ensure that your portfolio stays aligned with your goals and the market environment.