🎯 Understanding Risk Per Trade

Master the foundation of professional risk management

🎯 What is Risk Per Trade (%)

Risk Per Trade (%) is the maximum percentage of your total account balance you're willing to lose on a single trade if it goes against you and hits your stop loss.

💡 Simple Example

Your Trading Scenario

Your Account: $10,000

Risk Per Trade: 2%

Maximum Loss: $200 (if stop loss is hit)

This means:

✅

If Trade Wins

You Profit

Account grows beyond $10,000

❌

If Trade Loses

-$200

Stop loss hit, controlled loss

🛡️

Worst Case

$9,800

98% of capital protected

🔢 How It Works in the Calculator

You Set Your Risk

Choose your risk percentage (typically 1-2% for conservative, 2-5% for aggressive traders). This tells the calculator: "I'm willing to lose this % of my account on this trade."
Enter Your Stop Loss

Input your stop loss price or percentage. This is where you'll exit the trade if it moves against you. The stop loss determines how far away from your entry you're willing to be wrong.
Calculator Does the Math

The calculator automatically determines your exact position size based on your risk percentage and stop loss distance. It ensures that if your stop is hit, you lose exactly your target risk amount.
Position Size Adjusts Automatically

Tight stop loss = Larger position size (risk is closer to entry)
Wide stop loss = Smaller position size (risk is farther from entry)
This keeps your dollar risk constant regardless of stop loss distance.

⚡ Why This Matters

                Professional Risk Management Benefits
                
                        Protects Your Capital: You can survive multiple losing trades without blowing up your account
                    
                        Removes Emotion: You decide risk before entering, not during panic or euphoria
                    
                        Consistent Risk: Every trade risks the same percentage, making your strategy measurable
                    
                        Long-Term Survival: Even with a 50% win rate, proper risk management keeps you profitable
                    
                        Sleep Better: Knowing your maximum loss in advance removes anxiety

📊 Detailed Real-World Example

Bitcoin Long Trade Setup

Account Balance: $10,000

Risk Per Trade: 2%

Maximum Dollar Risk: $200

Entry Price: $50,000

Stop Loss: $48,500

Risk Per Coin: $1,500

Calculator's Position Sizing:

Maximum Risk ÷ Risk Per Coin: $200 ÷ $1,500 = 0.133 BTC

Position Value: $6,650

✓ Result:

If stop loss hits: You lose exactly $200 (2%)
If target hits at $53,000: You profit $400 (4%) with 2:1 R:R

📋 Quick Reference Guide

Conservative (1-2%)

Best for beginners and small accounts. Can survive 50+ losing trades in a row. Slow but steady growth with maximum safety.

Moderate (2-3%)

Balanced approach for experienced traders. Good growth potential with manageable drawdowns. Most professional traders use this range.

Aggressive (3-5%)

High-risk, high-reward. Only for experienced traders with proven strategies. Drawdowns can be severe - not recommended for most.

Ready to Calculate Your Risk?

Use our professional risk calculator to determine exact position sizes for every trade

📊 Open Risk Calculator