function calculateTrade() {
var balance = parseFloat(document.getElementById('accountBalance').value);
var riskPct = parseFloat(document.getElementById('riskPercent').value);
var entry = parseFloat(document.getElementById('entryPrice').value);
var sl = parseFloat(document.getElementById('stopLossPrice').value);
var tp = parseFloat(document.getElementById('takeProfitPrice').value);
if (isNaN(balance) || isNaN(riskPct) || isNaN(entry) || isNaN(sl) || entry === sl) {
alert("Please enter valid numerical values. Entry price and Stop Loss cannot be the same.");
return;
}
var riskAmount = balance * (riskPct / 100);
var stopLossDist = Math.abs(entry – sl);
var positionSize = riskAmount / stopLossDist;
var resultsDiv = document.getElementById('results');
resultsDiv.style.display = 'block';
document.getElementById('riskAmountDisplay').innerText = '$' + riskAmount.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('positionSizeDisplay').innerText = positionSize.toLocaleString(undefined, {maximumFractionDigits: 4});
if (!isNaN(tp)) {
var rewardDist = Math.abs(tp – entry);
var potentialProfit = positionSize * rewardDist;
var rrRatio = rewardDist / stopLossDist;
document.getElementById('potentialProfitDisplay').innerText = '$' + potentialProfit.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('rrRatioDisplay').innerText = '1 : ' + rrRatio.toFixed(2);
} else {
document.getElementById('potentialProfitDisplay').innerText = 'N/A';
document.getElementById('rrRatioDisplay').innerText = 'N/A';
}
}
Why Position Sizing is Crucial in Trading
In the world of financial markets, survival is more important than immediate profit. A Trading Calculator is the most fundamental tool for any trader, whether you are dealing with stocks, Forex, or cryptocurrencies. Without proper calculation, a few bad trades can wipe out your entire account capital.
The 1% Rule of Risk Management
Professional traders often follow the "1% Rule," meaning they never risk more than 1% of their total account balance on a single trade. For example, if you have a $10,000 account, your maximum loss per trade should be $100. This calculator automates that math, telling you exactly how many shares or units to buy based on where you place your stop loss.
How to Use the Calculator
Account Balance: Enter the total liquid capital available in your trading account.
Risk Percentage: The percentage of your balance you are willing to lose if the stop loss is hit (typically 0.5% to 2%).
Entry Price: The price at which you intend to execute your buy or sell order.
Stop Loss Price: The price level where your trade idea is invalidated and you exit the market.
Take Profit Price: Your target price where you plan to lock in gains.
Understanding Risk-to-Reward (R:R)
The Risk-to-Reward ratio determines the quality of your trade setup. A ratio of 1:3 means you are risking $1 to potentially make $3. Using this calculator allows you to see if a trade is worth taking before you ever click the "buy" button. If your potential reward is lower than your risk, you might want to reconsider the trade setup.
Note: Proper position sizing ensures that no single loss can significantly damage your psychological state or your trading longevity. Always use a stop loss to protect your capital.