How much should you risk on this trade?

The calculator multiplies your account balance by the risk percentage to set a dollar risk budget. It then divides that budget by the distance between entry and stop, and rounds down to a whole share so the planned loss stays within the budget.

Traders often use small fixed percentages such as 0.5% to 2% as examples when comparing plans; that range is not a personal recommendation. With fixed-fraction sizing, ten consecutive losses at 1% of the remaining balance would reduce it by about 9.6%, before fees and slippage.

Expected value combines the win rate you enter with the calculator’s potential profit and risk budget to estimate an average outcome per trade. It is a scenario based on those assumptions, not a forecast or a guarantee of future results.

There is no ratio that fits every strategy. A 1:2 payoff has a 33.3% break-even win rate before costs, but only if the target and stop are realistic and the assumed outcomes match your trading process.

With the same account balance and risk percentage, a wider entry-to-stop distance means fewer shares fit inside the risk budget. The planned dollar risk stays near the same budget while the share count changes.

Use a written risk limit, size each trade from the current account balance, and review whether your plan was followed before changing it. Losses can compound and no sizing method can prevent drawdowns or guarantee recovery.