Your risk plan

Position size, stop-loss and reward-to-risk

Members

In this lesson

Size any trade with one formula, set stops and targets, and know the win rate a plan needs to break even.

Key takeaways

Decide the dollar risk first (e.g. 1% of the account).
Position size = dollar risk ÷ stop distance per unit.
Set targets so reward is at least 2× the risk.
Break-even win rate = 1 ÷ (1 + reward:risk): 50% at 1:1, 33% at 2:1, 25% at 3:1 (before fees).

Watch this lesson with Tessa. The full video, worked example, calculator, quiz and Ask Tessa are part of Money Globe X Silver, Gold and Platinum. Create your account to start learning.

Next lesson: Calls and puts

Educational information only - not financial advice.

Create your free account

Free lessons, live markets and the Classroom. Founding members get their first year at a founding price - applied automatically at checkout.

Offer terms