Say I buy 1000 items of something (position size) at the price of 2500 and I then sell them again for 2000, I incur a loss of 200.

So, my calculation so far is:

1000/2500 = 0.4
0.4*2000 = 800

Loss: $200

Now, the problem I am facing is ...I want to pre-define the loss, buy and sale price and I need to calculate the amount of items (position size). So basically the whole calculation in reverse, while NOT knowing the value of 1000.

How would I do that? Any help is greatly appreciated :)


1 Answer 1


I must say I don't understand your calculation in the first place. If you bought something ($1000$ items or whatever) for $\$2500$ and sold them all for $\$2000$, isn't the loss $\$500$? Or if the price was per item, isn't the loss $\$500$ per item, i.e. $\$500\times 1000=\$500,000$ altogether?

Your calculation only makes sense to interpret as "you spent $\$1000$ to buy something that costs $\$2500$ per item, and then sold it for $\$2000$ per item, how much did you lose? With that interpretation, let $P$ be the position, $B$ be the buying price, $S$ be the selling price and $L$ the loss. Your calculation is, basically:


which then yields:


In our case:

$$\$200\times\frac{\$2500}{\$2500-\$2000}=\$200\times\frac{\$2500}{\$500}=\$200\times 5=\$1000$$


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