Risk Calculator
Calculate risk and reward parameters for your trades
Input Parameters
Enter your trade information
Calculation Results
Risk analysis and profit targets
Fill out the form and click "Calculate" to see the results
Understanding Position Sizing: The 1-2% Risk Rule
Professional traders don't risk their entire capital on a single trade. They follow strict risk management rules to protect their portfolio.
The 1-2% Risk Rule
Never risk more than 1-2% of your total capital on a single trade. This means if your stop loss is hit, you'll only lose a small percentage of your portfolio, allowing you to stay in the game long-term.
How to Calculate Position Size
To determine how many shares to buy, use this formula: (Capital × Risk %) ÷ (Entry Price - Stop Loss Price). Our calculator does this automatically for you.
Risk/Reward Ratio
A good trade should have a risk/reward ratio of at least 1:2. This means for every dollar you risk, you should aim to make at least $2. A ratio of 1:3 or higher is even better.
Why This Matters
By limiting your risk per trade, you can survive a series of losses and still have capital to trade. Even the best traders have losing streaks - risk management is what separates professionals from amateurs.
Example
If you have $10,000 in capital and follow the 2% rule, you can risk $200 per trade. If your entry is $50 and your stop loss is $45, you can risk $5 per share. This means you can buy 40 shares ($200 ÷ $5 = 40 shares).