@@Elcid_Barrett but still if he only risk 50% it's the same. In one of his position, he might risk 12,000 dollar and the same on the other(which is 25000 in sum)
Divide your capital by your down side risk (stop) indicated as % to give you your position size for the trade. If the down side risk, to the stop, is 3% then divide $100,000 by 3. (assuming your have set your risk at 1% of capital. If down side risk is 7% then divide $100,000 by 7 for your position size. Easy calculation.
Excellent info on calculating risk management and how many shares to buy. I made a similar spreadsheet but yours was better in showing the difference it makes in number of shares versus stop loss level.
I think you did John wrong. Since he will always risk 50% of the capital that IS LEFT after a losing trade, he would first lose 50k, then 25k, then 12.5k. In win direction his remaining money is doubled each time. So in your example he would end up at 100k again. And if you did this example with 25% risk you would finally have 180k (but with a drawdown of 58k which of course would be unbearable). Sally would be at 105k. Anyway I extremely appreciate your videos and have learned a lot. Thank you!
dude, im not sure if youre going to read this , but thank you a lot!!!!!!!!!!! im just reading your guide, thanks for bringing such a good content for us for free. being honest, youre the best pal!
You cant add percentage, if you loss 3% and in other trade you won 3%, you are not in breakeven total capital 1000 - 3% equal to 970 970 + 3% equal to 999.1 Great video!
Rayner I hear what you're saying and in your example you said John's account will be blown in 2 trades. I kinda disagree because since he's risking 50% of his account and hopes to make 100% on each trade and his strategy has a 50% win rate, he won't lose nor gain anything after 10 trades.
Hey, the viewer is turned off when you say John blows his account after hitting the 2nd stoploss. 50% of 100k, 50k remains; 50 % of 50k, 25k remains; 50% of 25k, 12.5k remains................. and so on
I think the initial capital never change on the calculator on what he's referring to, so even if John loses 50% he still calculates his position base on his initial capital.
Quick question.. let’s say I have a margin account and I want to risk 2% per trade. Do I risk 2% of my cash amount or 2% of my buying power? For exemple let’s say I have 1,000$ cash and 3,300$ of buying power.
I’m having trouble with the long position sizing tool. I don’t trade Forex and yet the tool defaults to a “Lot Size” of 1 and shows me incorrect quantities to buy. For example, let’s say I enter: Account size 10k Risk size 2% Entry at $1.05 Stop at $1.03 The position sizing tool tells me to buy 9,756.098 QTY. That can’t be right. That’s more than my account balance. And it always does this. And there’s no way to get rid of the “Lot Size” field or set it to zero. Any solutions you can think of?
It bugs me as well. Position might be way bigger than the current available balance. Maybe leverage is mandatory to trade with such position sizing strategy.
Thanks for the great video. So if I have 3k to start, 1% risk, 3K * 1%=30; buying point 15$, 13$ stop loss, I should only buy 15 shares. Wow I never think this way....I suppose this is a good way to force diversifying.
3:00 That is not how percentage calculations work. Since the account gets smaller she will not make back 2% on a winning trade of her starting account since she now has less money. Because she lost. She would break even according to your calculation. If Im not mistaking.
I'm very new to trading and neither am I a math wizard, but I agree with you. The result of Sally's trade is only to compensate her losses, meaning there's no profit and no losses in the end.
Thanks for the great content Rayner !! But please correct me if I am wrong, in the example you gave, John would be 100K again by the end of that series of trades ( LLLWWLLWWW), if he risks 50% of the 100K on every trade, on the first trade he would loose 50k, but the 2nd trade we would only loose 25K as his account would no longer be 100K but 50K, on the 3rd he would loose 12.5k, having a total account balance of 12.5K, now on the 4th he would have 25K, following the 1:2 risk reward, then 50k, then 25K, then 12.5K then 25K than 50K than 100K again. On the other side Sally would be = on the 1st ,lost 1k making 99k, then 98.010, then 97.030, then 98.970, then 100.950, then 99.940, then 98.941, then 100.920, then 102.938 and finally 104.997. So Jhon would be at the same exact position by the end, and Sally with the +5%. At the end Sally's approach if off course less risk.
Yes if we go with a fixed fractional position sizing. In the example, I just simply did a % of the original account size to keep things simple-and to illustrate a point that if you risk too much, it erodes your edge.
I don't know if Rayner monitors comments, so I'll ask this question for Rayner and for the group. I notice that when I set the risk at 1%, the position size is usually 25%-50% of my account value. Do y'all throw that high a percentage into one trade, or do you have a maximum (i.e., maximum of x% of the account per trade)? I've been doing max 10% of my account per trade. but that is honestly a fairly random limit. Just wanted to get some thoughts about that. Thanks, to anyone who weighs in on this!
Great video. If I’m not buying stocks and buying Call Options, does the calculator work in the same manner? Do I substitute the cost of the stock with the premium paid of the underlying stock? Will this then calculate the number of contracts I can buy?
How to position it In case of positional trading? In positional trading you have to have the complete amount... What you explained in the video was for intraday ...right
Hey My friend!! 😅 Missed that intro in this video, but thanks for the valuable information 😉. I think the stop loss level is too high in the example. What do you suggest to define SLL? I would say it has to be below 50% of the price of the stock...well, I guess because I am a conservative investor. It depends of the type of investor you are.... Rayner please share yor insights. 💱💴 Thanks!!! 😊😉
Tradingview, Papertrade account. In the long position tool, my quantity displayed on the tool appears in 9-10 digit numbers. Is this a problem? How do I convert this to lot size, do I divide the entire 9-10 digit number by 10,000?
Interesting...I am not a trader but thought John would be in much better shape if he used the stop loss correctly...win big and lose small...depends on the real outcomes of coin flip sequence. The probability is 50% win and 50% loss over a long sample. If the winners are bigger than the losers then John might retire early.
If you're long term investing is there really a need to do this considering you're just investing a certain amount of money per month for compound interest.
Hi Rayner, how to measure win-rate when a trader only TP 50% of his shares everytime a stock hits the TP. Ex: i bought 10K shares of stock ABC, then after 3 weeks, my TP is hit is i only sold 5K of shares and i let the remaining 5k run (now on its 10th week) and gain is 78% already. How do i measure win-rate in this case if all my porforlio is like this. thanks.
He is wrong, john didn't loose everything on second trade. He will loose only 50k, on third trade he will loose 25k etc. :) On LLLL trade John still have 12.5k :) So still have money to buy some ice cream ;) Music still be playing for John even after fifth trade. I just agree with meaning of this video, risk management is one of the most important things in trading.
Great videos, thank you for sharing your knowledge and experience! Very good explanations and easier to understand compared to other videos I have seen.
Yo Rayner...regarding to your risk calculator...please go to this video and pause at 6:36...so..Number of shares 1000*100 (per share)=$100,000 and its 100% risk since your capital is $100,000..but according to your calculator is 50% risk..so its wrong!!!..please fix it then trade buddy...thanks.
I still don't get the # of shares. If your buy price is 100 and it's telling you 50 shares isn't that going over your risk of 1% since 50 shares at $100 each = $5000. Yet your risk is $1000?
@LEGACY RETURN i was referring to risk per position. i think what you are saying is not to risk more than 1% of your entire portfolio; which is also correct and a good guide to avoid getting wiped out.
See the thing is if you put a small quantity with a big stop loss you can be cool at first and then you can check your strategy two and then if it goes wrong you will be exiting with minimal loss three and then if it rises then you have to change the stop loss and travel with the profit four..... But to do all this four we should be a robot.... 😂 as a human that emotions is the worst part coming from no where....
wait - isn't this an example of a 20% drawdown? Isn't that really high? I thought you want a max 5% drawdown? $100 stock = $95 stop, not $80 for example. thanks
Everytime she loses her account will have less capital, so her 1 percent is less than it was the first time. Same with the John example. he wouldnt los his account in two trades, hed only lose 25k on the second trade
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In my 5 years of trying to learn how to trade, You are thr 1st one who I met that breaks down information simply and cleaely. You are a teacher
my dumbass initially thought i shld only trade with only 1% of my account, thanks for clearing that up!
same here lol!
Risk 1% your account
Can someone clarify?
Rayner very simple explanation but this is the most important part. Awesome brother. Keep up the good work brother.
Thanks Rayner, I'm just getting started and your videos have been really helpful.
This is exactly what my system was missing. Thank You 🙏🏾 😊
John would still have 25% of his initial remaining if on the second trade he only risks half of his diminished account .
😂😂 yup
Johns still fcked hahaha
that's how I saw it too. 50% of portfolio each trade so 100k - 50k - 25k - 12.5k - 6.25k etc. Unless John was really high :)
Unless he opened 2 positions at the same time in 2 different stocks
@@Elcid_Barrett but still if he only risk 50% it's the same. In one of his position, he might risk 12,000 dollar and the same on the other(which is 25000 in sum)
Divide your capital by your down side risk (stop) indicated as % to give you your position size for the trade. If the down side risk, to the stop, is 3% then divide $100,000 by 3. (assuming your have set your risk at 1% of capital. If down side risk is 7% then divide $100,000 by 7 for your position size. Easy calculation.
FINALY !!!!!!!!!!!!!!!!!!!!!!! Super simple & Stupid easy to understand ...... THANK YOU :) ..... GREAT VIDEO
Thanks Rayner. You always explain things clearly
HE HE i like your video's great work thank you ! the logic to me is that if John take's a second shot of 50% and lose he is 75K down not all of it :)
Excellent info on calculating risk management and how many shares to buy. I made a similar spreadsheet but yours was better in showing the difference it makes in number of shares versus stop loss level.
I think you did John wrong. Since he will always risk 50% of the capital that IS LEFT after a losing trade, he would first lose 50k, then 25k, then 12.5k. In win direction his remaining money is doubled each time. So in your example he would end up at 100k again. And if you did this example with 25% risk you would finally have 180k (but with a drawdown of 58k which of course would be unbearable). Sally would be at 105k.
Anyway I extremely appreciate your videos and have learned a lot. Thank you!
dude, im not sure if youre going to read this , but thank you a lot!!!!!!!!!!! im just reading your guide, thanks for bringing such a good content for us for free. being honest, youre the best pal!
Thank you so much Rayner
we wouldn't have made it without you rayner !!
Love you Mr. Raynor. wonderful knowledge about the key Risk managment
Very well explained!
You cant add percentage, if you loss 3% and in other trade you won 3%, you are not in breakeven
total capital 1000 - 3% equal to 970
970 + 3% equal to 999.1
Great video!
obviously his percentage is out of the original 100K capital so yes he can add them.
@@CHAOZHOUREN Explain me, but you cant add in any situation
2% + 5% + 1% - 8% = its breakeven for you?(in any life situation)
@@pablodevoto4554 yours is a different case of course. we all know if you lose 50% you need to earn 100% to get back the same amount.
wow finally found someone to explain this so that I could understand, thanks
Rayner I hear what you're saying and in your example you said John's account will be blown in 2 trades. I kinda disagree because since he's risking 50% of his account and hopes to make 100% on each trade and his strategy has a 50% win rate, he won't lose nor gain anything after 10 trades.
Yes, but he will have to have a capital to stick for 10 trades. That is what he is trying to say, you are not supposed to blow up your account.
He will not be down to zero after the second trade, that’s a mistake
Where can I get your position calculator?
Thanks for to share us
I Love Really Risk Management 😍
Hey, the viewer is turned off when you say John blows his account after hitting the 2nd stoploss. 50% of 100k, 50k remains; 50 % of 50k, 25k remains; 50% of 25k, 12.5k remains................. and so on
I think the initial capital never change on the calculator on what he's referring to, so even if John loses 50% he still calculates his position base on his initial capital.
don't be an ass - it's an example and many people do NOT do what you say anyway, even if they should...
Constantly calculating max drawdown is also key, telling a lot about how risky is your trading system.
this was very helpful. thanks for the video!
Thank you for explaining this so well!
Message @larry.martin.fx on Instagram for help
Rayner, god of trading, does this apply to CFD trading too with leverage/margin 1:5 , 1:10? or to an investing account ?
Mann! really helpful😃
Thanks R. Your videos cover so much.
Thanks!
Hi rayner bro, could you share this google doc or make a video on how you set this position sizing spreadsheet up pls
Well explained
Exactly what I was looking for, thank you!
Thank you, this was very helpful!
Very good explanation, Thanks man
📈 great video
Very helpful. Thank you Ray.
Quick question.. let’s say I have a margin account and I want to risk 2% per trade. Do I risk 2% of my cash amount or 2% of my buying power? For exemple let’s say I have 1,000$ cash and 3,300$ of buying power.
2% is the loss, not the shares
Thanks Rayner. Really like the ways and example you always explain.
I’m having trouble with the long position sizing tool. I don’t trade Forex and yet the tool defaults to a “Lot Size” of 1 and shows me incorrect quantities to buy.
For example, let’s say I enter:
Account size 10k
Risk size 2%
Entry at $1.05
Stop at $1.03
The position sizing tool tells me to buy 9,756.098 QTY. That can’t be right. That’s more than my account balance. And it always does this. And there’s no way to get rid of the “Lot Size” field or set it to zero.
Any solutions you can think of?
It bugs me as well. Position might be way bigger than the current available balance. Maybe leverage is mandatory to trade with such position sizing strategy.
Thanks for the great video. So if I have 3k to start, 1% risk, 3K * 1%=30; buying point 15$, 13$ stop loss, I should only buy 15 shares. Wow I never think this way....I suppose this is a good way to force diversifying.
3:00 That is not how percentage calculations work. Since the account gets smaller she will not make back 2% on a winning trade of her starting account since she now has less money. Because she lost. She would break even according to your calculation. If Im not mistaking.
I'm very new to trading and neither am I a math wizard, but I agree with you. The result of Sally's trade is only to compensate her losses, meaning there's no profit and no losses in the end.
Thanks for teaching us 🙏🏻🙏🏻
நன்றி Rayner sir
Thank you Rayner Sir😍😍😍😍💌💌💌
When we get qty according to our stop loss price some times qty × stock price is greater than capital?
What to do in that case?
Was wondering the same. Maybe using a max between the 2, but this seems odd
Reyner thank you!
Thanks for the great content Rayner !! But please correct me if I am wrong, in the example you gave, John would be 100K again by the end of that series of trades ( LLLWWLLWWW), if he risks 50% of the 100K on every trade, on the first trade he would loose 50k, but the 2nd trade we would only loose 25K as his account would no longer be 100K but 50K, on the 3rd he would loose 12.5k, having a total account balance of 12.5K, now on the 4th he would have 25K, following the 1:2 risk reward, then 50k, then 25K, then 12.5K then 25K than 50K than 100K again. On the other side Sally would be = on the 1st ,lost 1k making 99k, then 98.010, then 97.030, then 98.970, then 100.950, then 99.940, then 98.941, then 100.920, then 102.938 and finally 104.997. So Jhon would be at the same exact position by the end, and Sally with the +5%. At the end Sally's approach if off course less risk.
Yes if we go with a fixed fractional position sizing.
In the example, I just simply did a % of the original account size to keep things simple-and to illustrate a point that if you risk too much, it erodes your edge.
@@tradingwithrayner Yes I get your point and makes all sense. Keep up the good work, your help is outstanding!
Hey Rayner, thank you for another wonderful video. I just had one request, will you share with us the Excel sheet for position sizing 🤗
Follow @tradingschool_ instagram to get best position sizing calculator
I use this formula:lots=risk/(Slpips*10). This works in forex, maybe you can modify the formula to fit in another markets or platforms
For those wanting a calculator similar to Rayner's: chartyourtrade.com/position-size-calculator/
Thank you so much you're GOATED for this
Pls I want to know when we are calculating for position size is our answer in unit or dollar?
I don't know if Rayner monitors comments, so I'll ask this question for Rayner and for the group. I notice that when I set the risk at 1%, the position size is usually 25%-50% of my account value. Do y'all throw that high a percentage into one trade, or do you have a maximum (i.e., maximum of x% of the account per trade)? I've been doing max 10% of my account per trade. but that is honestly a fairly random limit. Just wanted to get some thoughts about that. Thanks, to anyone who weighs in on this!
Hello Rayner. What about if I were to swing trade? Should I make my stop loss wider or tighter?
Great video. If I’m not buying stocks and buying Call Options, does the calculator work in the same manner? Do I substitute the cost of the stock with the premium paid of the underlying stock? Will this then calculate the number of contracts I can buy?
How to position it
In case of positional trading?
In positional trading you have to have the complete amount...
What you explained in the video was for intraday ...right
Hey Raymond are you from Singapore? Love your channel!
Hey My friend!! 😅 Missed that intro in this video, but thanks for the valuable information 😉.
I think the stop loss level is too high in the example. What do you suggest to define SLL? I would say it has to be below 50% of the price of the stock...well, I guess because I am a conservative investor. It depends of the type of investor you are....
Rayner please share yor insights. 💱💴
Thanks!!! 😊😉
Sir with 1% risk per trade how many stocks you can have with to have full allocation
brooo you are amazing trader
Thanks Rayner I learn from my mistake haha
Hi Rayner.
Do you have an excel formula for Position Sizing Calculator for Stocks so I can have it done just like yours? Thank you!
do you have a link to the Risk management calculator you used ?
Hi Rayner , do you have a video on system trading and how to set up ?
Rayner do you have your calculator anywhere for download? Can't find one as simple as yours.
Lol just remake it yourself... it is an extremely basic spreadsheet
Very helpful!
Tradingview, Papertrade account. In the long position tool, my quantity displayed on the tool appears in 9-10 digit numbers. Is this a problem? How do I convert this to lot size, do I divide the entire 9-10 digit number by 10,000?
do you put your full account in one trade?
Does this calculation take into account margin? or this is for No Margin accounts?
HI love ur skills in teaching also yes please sell this spreadsheet as they are no other ones like this one
how can I setup this calculator
Thanks, Man...
Interesting...I am not a trader but thought John would be in much better shape if he used the stop loss correctly...win big and lose small...depends on the real outcomes of coin flip sequence. The probability is 50% win and 50% loss over a long sample. If the winners are bigger than the losers then John might retire early.
When you say your buy price is $100, do you mean like you are buying $100 worth of shares, or that is you entry point? Thank you!
wait never mind! lol i think i understand now!
If you're long term investing is there really a need to do this considering you're just investing a certain amount of money per month for compound interest.
Hi Rayner, how to measure win-rate when a trader only TP 50% of his shares everytime a stock hits the TP. Ex: i bought 10K shares of stock ABC, then after 3 weeks, my TP is hit is i only sold 5K of shares and i let the remaining 5k run (now on its 10th week) and gain is 78% already. How do i measure win-rate in this case if all my porforlio is like this. thanks.
how to include leverage in calculating risk
Message @larry.martin.fx on Instagram
I'm terrible at maths and I feel like by the time I've done all these confusing calculations the price would have probably changed against me.
He is wrong, john didn't loose everything on second trade. He will loose only 50k, on third trade he will loose 25k etc. :) On LLLL trade John still have 12.5k :) So still have money to buy some ice cream ;) Music still be playing for John even after fifth trade. I just agree with meaning of this video, risk management is one of the most important things in trading.
Good video but how do you calculate and get position for your stop loss?
Message @larry.martin.fx on Instagram for help
Can you please share the excel sheet?
Great videos, thank you for sharing your knowledge and experience! Very good explanations and easier to understand compared to other videos I have seen.
how can we download this template
Yo Rayner...regarding to your risk calculator...please go to this video and pause at 6:36...so..Number of shares 1000*100 (per share)=$100,000 and its 100% risk since your capital is $100,000..but according to your calculator is 50% risk..so its wrong!!!..please fix it then trade buddy...thanks.
Im confuse.. so u mean if john enters at 10 he would cut at 5?
I still don't get the # of shares. If your buy price is 100 and it's telling you 50 shares isn't that going over your risk of 1% since 50 shares at $100 each = $5000. Yet your risk is $1000?
How about cost trade???
This is applicable for only one particular trade
What if we take 5 trades a day
Great
What about commission and spreads? Aren't those calculated as well?
Message for guide @larry.martin.fx on Instagram
So how do you know where to set your Stop Loss?
according to the book how to make money in stocks by william oneal you should set it at 7-8%
@LEGACY RETURN i was referring to risk per position. i think what you are saying is not to risk more than 1% of your entire portfolio; which is also correct and a good guide to avoid getting wiped out.
how to include fees into risk management percent?
Super
When you say 1:2 ratio... let's say Sally has 100,000 and invests 1000 and receives a 1:2 ratio. Does that mean she ends up with 101,000 or 102,000?
Lol y was I laughing so hard at John loosing a 100k account in 2 trades
Edit: let's just give John a bit fat X 🤣🤣🤣
Is it possible to have 0.001 position size
See the thing is if you put a small quantity with a big stop loss you can be cool at first and then you can check your strategy two and then if it goes wrong you will be exiting with minimal loss three and then if it rises then you have to change the stop loss and travel with the profit four..... But to do all this four we should be a robot.... 😂 as a human that emotions is the worst part coming from no where....
hey hey whats up my friend
wait - isn't this an example of a 20% drawdown? Isn't that really high? I thought you want a max 5% drawdown? $100 stock = $95 stop, not $80 for example. thanks
Mutual funds are better than individual stocks
John did not get wiped out but, he still has $23,730 in his account.
Everytime she loses her account will have less capital, so her 1 percent is less than it was the first time. Same with the John example. he wouldnt los his account in two trades, hed only lose 25k on the second trade