Volatility (ATR) Position Size Calculator

An ATR (Average True Range) position size calculator tells you exactly how many shares to buy so that if the market moves against you by its typical daily range — measured by ATR — your account loses no more than your chosen risk percentage. Instead of requiring a fixed stop-loss price, it derives the stop distance from the instrument’s own volatility, automatically sizing you smaller in wild markets and larger in calm ones.

ATR, introduced by J. Welles Wilder Jr. in his 1978 book New Concepts in Technical Trading Systems, measures how much an instrument typically moves in one period. The True Range for each bar is the largest of: (high − low), |high − previous close|, and |low − previous close|. ATR is a 14-period smoothed moving average of those True Range values. Your charting platform calculates it automatically; you just read the number and enter it here in price units (e.g. $2.50, not 1.67%).

Three steps: (1) Multiply your account size by your risk percentage to get the dollar amount at risk — e.g. $50,000 × 1% = $500. (2) Multiply your ATR by your chosen multiple to get the stop distance per share — e.g. ATR $2.50 × 2 = $5.00. (3) Divide the dollar risk by the stop distance and floor the result — e.g. floor($500 / $5.00) = 100 shares. Capital required is 100 × entry price; max loss is 100 × $5.00 = $500.

The multiple translates ATR into the stop distance: a wider multiple gives more room before the stop fires, but it also means fewer shares for the same risk budget. Common conventions by trading style: 1× for the pure Van Tharp percent-volatility model; 1.5–2× for day trading (tighter stops, faster exits); 2–3× for swing trading; 3–4× for position trading with wide stops. Start at 2× and adjust based on how often your stops are being hit by normal noise vs real adverse moves.

Van Tharp’s percent-volatility model, described in The Definitive Guide to Position Sizing Strategies, is the original ATR-based sizing formula. It sets the volatility exposure — the fraction of capital allocated to each position’s daily price risk — to a fixed percentage. The formula is: Shares = (Account × Risk%) / ATR, which is identical to this calculator with atrMultiple set to 1. Setting the multiple to 1 in the calculator reproduces Van Tharp’s original results exactly.

With a fixed stop-loss calculator you supply a specific stop price and the formula computes risk per share as |entry − stop|. With ATR position sizing you supply the instrument’s ATR and a multiple; the stop distance is derived from volatility rather than a manually chosen price level. The underlying shares formula is identical — shares = floor(riskAmount / riskPerShare) — but the source of riskPerShare differs: market-derived volatility (ATR × multiple) versus a manually chosen stop price. ATR sizing is preferred when you want your stop to adapt to how noisy the instrument is.

Rounding to the nearest whole number can push the share count above the exact quotient, which makes your actual loss exceed your risk budget. Flooring always keeps maxLoss = shares × riskPerShare at or below your dollar risk limit. For example, floor(500 / 3.0) = 166 shares; 166 × $3.00 = $498 within the $500 budget. Rounding up to 167 shares gives $501 — a small but real breach of the rule.

'Capital required' is the total cash needed to open the trade: shares × entry price. It can exceed your account size when ATR is very small relative to price, because a tight stop allows a large share count before the risk budget is exhausted. For example, a $5 ATR on a $500 stock with a 2× multiple gives a $10 stop; a $1,000 risk budget buys 100 shares — a $50,000 notional on a $50,000 account. In a cash account you are limited to what you hold; with margin the broker extends your buying power. The risk math (shares and max loss) remains correct regardless.

If either ATR or the ATR multiple is zero, the risk per share is zero, which would cause a division by zero. The calculator intercepts this case and returns zero shares with an isZeroRisk flag rather than Infinity or an error. Make sure you are entering the ATR in price units (e.g. $2.50) and the multiple is at least 0.1.

Yes. Enter ATR in the same units as your entry price (pips for forex, points for index futures, dollars for crypto). For futures contracts that have a point value other than 1, multiply ATR × point-value before entering it, or multiply your result by the contract size. The core formula — shares = floor(riskAmount / riskPerShare) — works for any instrument where you can express both ATR and entry in the same price unit.

No. ATR measures recent realized volatility within normal market hours. An overnight earnings gap or macro news event can move price far beyond ATR × multiple in a single overnight session, so your realized loss can exceed the modeled maximum. This is called gap risk. To mitigate it, some traders use a slightly wider multiple (e.g. 3× instead of 2×) or use options to cap the downside. The modeled max loss should be treated as a floor under normal conditions, not an absolute guarantee.

Kelly Criterion sizes positions by maximizing the geometric growth rate of your account using your edge (win rate × payoff ratio). Fixed-fractional sizing risks a constant fraction of current equity regardless of volatility. ATR / percent-volatility sizing keeps your per-trade dollar risk constant while automatically adjusting share count for each instrument's volatility — volatile instruments get smaller positions, calm instruments get larger ones. The three approaches address different questions: Kelly asks 'how much risk maximizes growth?', fixed-fractional asks 'what constant fraction protects the account?', and ATR sizing asks 'how many shares expose me to the same daily volatility risk?'