Risk & position sizing
The maximum you should lose on one trade, before anything else about the trade is decided.
The maximum you should lose on one trade, before anything else about the trade is decided. The page states the equation, the units it expects and the rounding it applies, so the result can be reproduced by hand.
A calculator gives you a number. This one feeds the next: account to risk, risk to position size, position size to the trade, and the trade to expectancy, drawdown and risk of ruin.
See the performance tools →Positions that move together are not separate risks. The adjustment applies a factor of 1.0 for highly correlated positions, 0.6 for loosely related ones and 0.35 for genuinely independent ones.
A $25,000 account with three positions at 1% each, somewhat correlated:
The nominal figure flatters you when the positions are independent and understates you when they are not. Only the adjusted figure describes a bad day.
If they are all long the same currency, close to it. Three longs in EURUSD, GBPUSD and AUDUSD behave on a dollar move like one large dollar-short.
Most systematic traders cap correlation-adjusted exposure somewhere between 4% and 6%. The number matters less than computing it adjusted rather than nominal.
Risk per trade is what one stop costs you. Total risk is what a bad day costs across every open position — and once the positions are correlated, it is much closer to their sum than to any one of them.
A calculator answers one question and raises the next. These are the ones this figure feeds into.
Whether two open positions are really one position wearing two tickers.
Turn an account balance, a risk percentage and a stop distance into a size in lots, shares or contracts.
Peak-to-trough decline, and the gain required to climb back out of it.
Risk Calculator · rounding shown to the precision displayed