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Is there an easy way to calculate how much to add to a position if I know how much I want to lose from it if it drops a certain percentage?

For instance, I entered XYZ stock and am up $1000. Now I want to add to the position but I want to put a stop loss at 15% and only lose $800 maximum. That way I still end up with a $200 profit. How can I calculate how many more shares to buy?

More information from comments:

To keep it simple let’s say I bought 10 shares of XYZ at $100 per share and now it’s trading at $150/sh. So I am up $500. Worst case scenario if the stock drops 15% after I pyramid I want to come out with a 10% profit. How many new shares do I acquire if I want to set a new trailing stop loss at 15%?

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  • The answer is an equation which any number of people here can formulate. But in order to do so, more information is needed such as current number of shares and current price. At this point, the stop at 15% and only lose $800 is a question mark but I'll leave that in abeyance until you provide the information. Jul 2 '20 at 3:44
  • Is that $1000 you are currently up your profit at the current price or your profit at your current stop loss level for your initial position? Usually, with pyramiding, you would want to enter your subsequent trades at half the value of the original trade. It is like dollar cost averaging in reverse, so as the price moves up into profit you buy some more stock with that profit, as so on.
    – Victor
    Jul 2 '20 at 4:02
  • (Changed profile) To keep it simple let’s say I bought 10 shares of XYZ at $100 per share and now it’s trading at $150/sh. So I am up $500. Worst case scenario if the stock drops 15% after I pyramid I want to come out with a 10% profit. How many new shares do I acquire if I want to set a new trailing stop loss at 15%?
    – frankie
    Jul 2 '20 at 12:48
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You need to buy 4-2/3 shares. If you do the math, your net gain will be 10% after a share price drop of 15%.

This sounds like a homework problem. If you need to demonstrate your work, you're in trouble because I'm not going to provide the equation. Hint: The left side is the 10% gain and the right side is the 15% stop loss.

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  • Thanks. It's not a homework problem - I'm just bad at math. The cost basis of the first purchase is throwing me off.... Jul 2 '20 at 20:18

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