Dollar risk is the bridge between a percentage rule and an order ticket. You decide what fraction of the account you are willing to lose on one idea, convert it to money, and only then work out how many shares or contracts that buys.
The arithmetic is deliberately dull. On a $25,000 account with a 0.8% risk-per-trade rule, dollar risk is $200. If your entry is $40.00 and your hard-stop is $38.50, the stop-distance is $1.50, so you buy 133 shares ($200 / $1.50). The share count falls out of the risk, never the other way round.
Treat it as a ceiling, not a target. Real exits include slippage, commissions and the occasional gap-risk event, so a $200 planned loss is more honestly a $200-to-$260 loss. Traders who size off the round number and forget the friction quietly run 10-30% hotter than they think.
Related: stop-distance, share-sizing-formula, risk-per-trade