Portfolio Risk Management Calculator

What is Portfolio Risk Management?

Portfolio risk management is a crucial aspect of successful trading and investing. It helps you determine appropriate position sizes and risk levels for your trades while protecting your overall portfolio value. Proper risk management ensures that no single trade can significantly impact your trading capital.

How to Use the Calculator

To use this calculator, input your total portfolio value, risk tolerance percentage, intended position size, and stop loss percentage. The calculator will then compute various risk metrics to help you make informed trading decisions and maintain proper risk management.

Understanding the Results

The calculator returns four key metrics:

• Maximum Position Risk: reflects the maximum amount which one should risk on one single trade.
• Portfolio risk %: the amount of the portfolio that is at risk due to the given position.
• Maximum Loss Amount: the value of your potential loss according to your stop level
• Recommended Position Size: offers recommendations on position sizing taking into account your risk constraints.

Best Practices of Managing Risk

General risk management guides suggest:

• Never risk more than 1-2% of your total portfolio on a single trade
• Set stop losses to limit potential losses
• Consider your overall risk tolerance when sizing positions
• Keep position sizing consistent among trades

Where can I learn more about portfolio risk management?

For further reading on the subject of portfolio risk management, we recommend the following:

• Position Sizing and Risk Management - Comprehensive guide from Investopedia
• The 2% Rule: A Very Popular Risk Management Rule-Explanation in detail.

The sources above are verified and updated regularly for the latest developments in finance and trading.