The risk-to-reward
The expected return on a trade per unit of risk.
Risk-Reward Ratio is a ratio used to compare expected returns against the amount of risk taken.
Risk-Reward Ratio
Risk-to-reward is a ratio that quantifies the risk versus the reward of a trade.
The risk-reward ratio for the trade is 2:1 means we’re risking $1.00 to make $2.00.
The risk is the difference between the entry level and the stop loss
The reward is the distance from the entry point to the take-profit level
Trades should offer a reward twice or 3 times the risk at least
Trade Size (volume) per signal
The risk on a single trade should be less than 5 percent of the total balance. Depending on the amount of your balance
With more balanced us,e less percent,t maybe 1%
for example
Apple
sell from 162
TP@ 140
SL @ 173
GOLD
sell from 1980
TP@ 1880
SL @ 2030
we risk 1$ to make 2$
How to determine trade size for your stock strategy
1. Define Your Risk Per Trade
This is the maximum percentage of your total capital you’re willing to lose on a single trade.
Rule of thumb:
1% to 2% of your account balance per trade is a common risk range.
Example:
If you have a $10,000 account and risk 1% per trade, you’re risking $100 per trade.
2. Determine Your Stop-Loss Level
Where will you exit the trade if it goes against you?
Use technical analysis: recent swing highs/lows, ATR, support/resistance, etc.
Example:
If your entry is $50 and your stop-loss is $48, you’re risking $2 per share.
3. Calculate Trade Size (Position Size)
Use this formula:
Example (from above):
-
Account risk = $100
-
Risk per share = $2
4. Factor in Volatility (Optional but smart)
For trend/swing trading, you might want to reduce your size in more volatile stocks.
Use ATR (Average True Range) to compare volatility across stocks.
Example Strategy Summary (for your site)
“My trend trading strategy uses 1% fixed risk per trade with stop-losses based on recent swing levels. Position size is calculated dynamically to keep losses controlled, regardless of stock price or volatility.”
Stock strategy is focused on trend trading (and sometimes swing trading), and trade size is crucial to managing risk and maximizing returns.
