Trading Risk Calculator
Calculate your potential trade risk, risk percentage, position exposure and risk-to-reward ratio before entering a trade.
Calculate Your Trade Risk
Enter your account size, planned risk, entry price, stop-loss and position size. The calculator will estimate your monetary risk and risk-to-reward ratio.
Calculation Results
What Is Trading Risk?
Trading risk is the amount of capital that could potentially be lost if a trade reaches its planned stop-loss level. Understanding this amount before entering a position can help traders evaluate the financial exposure of a trade.
A risk calculator converts the distance between an entry price and a stop-loss price into an estimated monetary amount based on the position size and value of the instrument.
Basic Trading Risk Formula
The exact formula can vary depending on the asset. Forex, stocks, commodities, cryptocurrencies and futures can have different contract specifications and pricing conventions.
Risk Percentage Formula
Maximum Planned Risk
Why Calculate Risk Before a Trade?
- Understand potential monetary exposure.
- Compare the planned trade risk with account size.
- Determine whether the position size fits the planned risk amount.
- Estimate potential reward relative to potential risk.
- Build a more consistent trading plan.
Example
Suppose a trading account contains $10,000 and a trader chooses a hypothetical risk level of 1%.
The mathematical maximum planned risk would be:
$10,000 × 1% = $100
If the calculated trade risk is $80, the trade would represent 0.8% of the account before additional trading costs.
Understanding Risk-to-Reward
Risk-to-reward compares the potential amount at risk with the potential reward of a trade.
For example, if a hypothetical trade has $100 of potential risk and $200 of potential reward, the mathematical risk-to-reward ratio is 2:1.
Risk-to-reward does not guarantee that a trade will be profitable. Actual outcomes depend on market movement, execution, strategy and other factors.
Frequently Asked Questions
What is a risk calculator?
A risk calculator estimates the potential financial exposure of a trade using variables such as account balance, position size, entry price and stop-loss price.
How do I calculate my trading risk?
A basic calculation multiplies the position size by the distance between entry and stop-loss and the applicable value per price unit. The result represents an estimated monetary risk before trading costs.
What does 1% risk mean?
A 1% risk level means that the planned potential loss, based on the selected assumptions, equals 1% of the account balance. For example, 1% of a $10,000 account is $100.
Does this calculator determine the correct position size?
The calculator estimates the risk of the position size entered. For position sizing based on a specific risk amount and stop-loss distance, use the EZTradingHub Position Size Calculator or Lot Size Calculator.
Does the risk calculator include spread and commission?
No. The basic calculation does not automatically include every trading cost. Spreads, commissions, swaps, slippage, taxes and other costs can affect actual results.
Can I use this calculator for forex?
Yes. The calculator can be used for forex when the appropriate position size and value-per-price-unit assumptions are entered. Broker-specific contract specifications should always be checked.
Can I use it for stocks or crypto?
Yes, the basic mathematical approach can also be used for assets such as stocks and cryptocurrencies, provided the correct position size and monetary value per price unit are entered.
Related Trading Calculators
Continue planning your trade with other EZTradingHub calculators.
Risk Disclaimer
The information and calculations provided by EZTradingHub are for educational and informational purposes only. They do not constitute financial, investment, trading, tax or legal advice.
Trading forex, CFDs, cryptocurrencies, stocks, commodities and other financial instruments involves risk. Leveraged products can result in losses that may be substantial.
Calculator results are estimates and may not account for spreads, commissions, slippage, swaps, taxes, liquidity conditions or broker-specific contract specifications. Always verify relevant trading specifications before placing an order.