~/tools/position-size-calculator $ run risk-position-sizer --account=10000
Position Size & Risk Calculator
Calculate exact trade position sizing, dollar risk amount, risk per unit, and risk-to-reward ratio for stock, crypto, and forex trading.
// Risk Management Principles
Professional traders rarely risk more than 1% to 2% of total capital on any single trade.
A 1:3 risk/reward ratio means risking $1 to potentially make $3. This ensures long-term profitability even with a 40% win rate.
// Frequently Asked Questions (Position Sizing)
Why is position sizing important in trading?
Position sizing protects your trading capital from catastrophic losses. By calculating position size based on stop-loss distance and risk percentage, you control exact monetary risk regardless of asset volatility.
How is position size calculated?
Position Size = (Account Balance × Risk %) / |Entry Price − Stop-Loss Price|. For example, with $10,000 capital, 1% risk ($100), entry at $50 and stop-loss at $48 ($2 risk per unit), position size is 50 units.
What is a good risk-to-reward ratio?
A minimum risk-to-reward ratio of 1:2 or 1:3 is recommended by quantitative traders. At 1:3, winning 3 out of 10 trades will generate net positive returns.