: The total dollar amount you are willing to lose on this specific trade (often 1–2% of your total portfolio).
: The difference between your purchase price and your "exit" point if the stock drops (stop-loss). how to know how many shares to buy
To determine how many shares to buy, you must balance your against your risk tolerance . Financial professionals generally recommend focusing on the total dollar amount you are willing to lose rather than just how many shares you can afford. 1. The Core Position Sizing Formula : The total dollar amount you are willing