A rule of thumb is this: if you are a risk taker, each investment you should aim not to lose more than 3% of your total available funds. If you are very conservative, lower that 3% to 0.5% to 1%. For average risk takers, try to keep no more than 2% of your funds at risk in each investment.
Once you set the % at risk target, let's say, 2%, next is to determine your stop loss price point (Yes, for each investment, you should set your stop loss price point, because nobody could guarantee your decision is always correct, you could lose money in the investment world), let's call it L, and your entry price is P, and your total funds is F. Based on all the information, the number of shares you could buy should be set as:
F*2% / (P-L)
For example, if you have $10,000 fund, your long entry point is $10, and your stop loss point is $9, then the number of shares you could buy is $10000*2%/(10-9) = 200.
In addition to risk control, another important decision every investor should make, before actually committing your money to an investment, is Risk:Reward ratio, we will discuss this in our next blog post.