Understanding Risk Exposure in Live Markets
While position sizing tells you how much to buy, the risk calculator shows you the absolute capital cost of a trade failing. By knowing exactly how much cash is at risk, you can stay within your personal risk tolerance levels and protect your trading longevity.
How to Check Capital Risk
The risk calculator multiplies your trade volume (lots) by the distance to your stop loss and the currency value of each pip:
Cash Risk = Position Size (Lots) × Stop Loss (Pips) × Pip Value
Why a 1% Limit is Recommended
Professional traders rarely risk more than 1% to 2% of their account balance per trade. Doing so ensures that even a 10-trade losing streak only draws down the account by roughly 10%, which is relatively easy to recover from. Risking 5% or 10% per trade means you could face account ruin within a single highly volatile trading session.