Professional risk planning
Position Size & Risk Calculator
Define risk before entry, compare reward in R-multiples, and estimate system-level drawdown risk across stocks, crypto, forex, and futures.
Trade risk map
Long stock position
- Stop distance
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- Loss at stop
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- Profit at target
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- System expectancy
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Risk of ruinRisk of ruinA simplified probability estimate based on the assumptions entered for win rate, payoff, risk, and drawdown threshold.Why it mattersTreat it as a stress signal. It is only as reliable as the trading record behind the inputs.Open the financial glossary →
Outcome ladder
Price levels by R-multiple
Use this before every trade
Position size is derived from the loss allowed at the stop - not the profit hoped for at the target. Risk-of-ruin is a simplified statistical estimate based on your stated win rate, average win, risk per trade, and drawdown threshold. It is not a guarantee and should be supported by a sufficiently large trading record.
Decision guide
Set the maximum loss before deciding the position size
The decision it supports
Translate an account-level loss limit and a price-based invalidation point into a maximum quantity. It helps reveal when a proposed position is too large for the chosen stop or when trading costs materially weaken the plan.
Check quantity and execution risk
In a hypothetical $50,000 account, a 1% allowance creates a $500 planned loss budget. With a $100 entry, $95 stop and $5 total round trip costs, the model permits 99 whole shares. Price risk is $495 and costs add $5. If the exit fills at $93 instead, those same 99 shares would lose $698 including costs. The intended stop is not a guaranteed exit price.
Load the hypothetical 99 share example
Change the stop input to $93 to model that wider assumed exit distance before entering. Quantity falls to 70 shares. This tests an assumption; it does not recommend a trade, a risk percentage or changing a live stop.
Formula
Loss budget equals account equity multiplied by risk percentage. Position quantity is the usable loss budget divided by loss per unit, rounded down to a tradable quantity. Futures and forex require the stated point or pip value. Reward-to-risk compares target distance with stop distance.
Assumptions and limitations
- A stop order does not guarantee the stop price; gaps, low liquidity, and fast markets can increase loss.
- The simplified ruin estimate depends entirely on the accuracy and size of the historical sample entered.
- Correlation between positions, margin rules, taxes, borrow costs, and changing volatility need separate review.
- A calculated size does not establish that a trade has positive expected value.
Common mistakes to avoid
- Moving the stop farther away merely to keep a preferred quantity.
- Using an untested win rate or excluding losing and skipped trades from the record.
- Ignoring spread, slippage, commissions, funding, or contract specifications.
- Applying the full risk budget independently to several highly correlated positions.
Continue learning: Trading process guides · Risk terms
Check execution risk: SEC bulletin on stop, stop limit and trailing stop orders. Our hypothetical share calculation is separate from the bulletin; no stop price guarantees an execution price.
Print a free planning worksheet to keep the assumptions, outputs and review questions together. No account or payment is required; worksheet entries are not sent to Market Master.