Position Sizing Spreadsheet

Microsoft Excel Position Sizing Spreadsheet
By Jason Mitchell

Position sizing and risk management techniques go hand in hand with succesful trading using technical analysis. The easiest and quickest way to work out the appropriate position size and risk levels for your trading is to use a position sizing spreadsheet. We offer subscribers a FREE version of the spreadsheet (click here) that we use ourselves or for a small investment you can get a copy of one on this page without subscribing...

This page will show you briefly how it is used.

NOTE: WE DO NOT GUARANTEE THE ACCURACY OF THE RESULTS OF THIS SPREADSHEET USE THIS AT YOUR OWN RISK

The spreadsheet is very simple but quick to use and is the one we use for most of our trading. The following is how the spreadsheet appears in Microsoft Excel (which is needed to run the spreadsheet).

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Basically the Blue areas (called cells) are the areas that we are required to put some figures in to. The yellow, white and red areas are the figures that are calculated automatically. The yellow and red areas are the ones we are most interested in. The figures we need to know for position sizing are:

*	Buy Price
*	Stop Loss Level
*	Maximum Position Size in Dollars
*	Approximate Loss Allowable in Dollars
*	Brokerage Costs
*	Target Sale Price (optional)
*	The Desired Risk Reward Ratio (optional)

The Figures that are automatically calculated are:

*	Maximum Number of Shares That Can Be Purchased
*	Net Cost of Purchase (Before Brokerage)
*	Total Cost of Purchase (Including Brokerage)
*	Amount At Risk Based On The Stop Loss
*	Profit/Loss Based on Target or Sale Price
*	Risk Reward based on the Target or Sale Price
*	Price that the Stock Would Need to Reach for your Desired Risk Reward Ratio

The only figures we need to change or enter are all placed in the blue squares. The top line contains all the figures that are needed to assess the position size. The blue cell on the bottom row is where we adjust the number of shares we wish to purchase. This needs to be adjusted to get the exact figures as when the formula assesses the maximum position size it does not round the number down automatically. It can also be adjusted if we do not wish to buy as many stocks. The following diagram explains it fairly well.

The spreadsheet is very quick and easy to use and the following diagram shows where each figure goes. Note the target or sale price is optional. It can be useful for establishing risk reward strategies on pattern trades where targets can be set. It can also be used to determine at which price a risk reward ratio may be suitable.

The following shows which figures are calculated automatically and which ones of these are most useful