The Trade Size Calculator allows you to position-size your trades based on your trading strategy and risk tolerance level. Access to the Trade Size Calculator is reserved only to our Home Hedge Fund and WiseTraders Summit members.
The application is separated into a “Long Stock/CFD” trade and a “Long Spreadbet” trade. We do not recommend using this calculator to position-size a “short” trade.
CFD trading is currently not allowed in the US. If you are a US citizen or resident, CFD trading will not be applicable to you. But you can still use the application to position-size a long stock or a long spreadbet trade.
Certain fields within this application such as commission, margin factor etc will be broker-specific. You’ll need to obtain these values from your broker if you want a more accurate result from the Trade Size Calculator.
You’ll find little information buttons beside each of the various fields in the application. These contain information/instructions on their respective fields.
To use the trade size calculator, select either Long Stock/CFD or Long Spreadbet and key in all the required inputs. The required inputs are all located above the “Calculate” button. The commission field under Long Stock/CFD and the slippage factor field under Long Spreadbet are optional inputs.
Upon keying in all the required inputs, click “Calculate” and the results will appear below the “Calculate” button.
Here are a few additional tips to help you utilize the tool better:
Field | Instructions | |
Inputs | Trading Capital | This is your trading account size. |
Max % Cash per Trade | This is the percentage amount of your account that you are prepared to risk on ONE trade. It is essentially your risk tolerance level on the trade. We recommend setting a more conservative level of 2.5% to avoid blowing up your account | |
Margin Factor | If you are trading stocks, the margin factor will typically be 1. With CFDs, you will have a higher margin factor. This will vary according to the stock and your broker. As a starting point, use a conservative margin factor of 4 for CFDs | |
Share Price | Your entry price will typically be a few points above a flag high | |
Commission | An optional input field. Can be skipped if you are unsure of your commission charges | |
Initial Stop | Your stop loss price will typically be a few points below a flag low | |
Outputs | Max Cash per Trade | Max % Cash per trade X Share Price This is the maximum amount of cash that you can place into a trade. We call this your absolute risk threshold. It is calculated based on your risk tolerance level for the trade and will not be affected by your margin factor. |
# of Shares* | Max Cash per Trade/Share price X Margin factor The maximum number of shares you can buy according to your absolute risk threshold. This will increase when your margin factor increases. You typically do not want to buy more than the number of shares stated here as that will exceed your risk tolerance level | |
Trade Value (max risk) | # Shares X Share Price Your maximum risk if the stock price drops to zero. This will increase when your margin factor increases | |
Cash Required | min[Trade Value, Max Cash per Trade] This will never exceed your risk tolerance level or absolute risk threshold. It will be capped at your absolute risk threshold when your margin factor increases beyond your risk tolerance | |
Practical Risk per Share | Share Price - Initial Stop Since this is based on a per share basis, it is not affected by your margin factor | |
Practical Risk* | Practical Risk per Share X # Shares This will increase when your margin factor increases | |
Practical Risk on Cash | Practical Risk/Cash Required This will increase when your margin factor increases | |
Practical Risk on Trade Size | Practical Risk/Trade Value This involves only your practical risk per share and your entry price. It is not affected by your margin factor | |
Practical Risk on Account* | This is the percentage amount of your account that you are risking on the trade. It will increase when your margin factor increases. You typically do not want this value to be higher than your risk tolerance level (Max % Cash per trade) |
| Field | Instructions | |
Inputs | Trading Capital | This is your trading account size. |
| Max % Cash per Trade | This is the percentage amount of your account that you are prepared to risk on ONE trade. It is essentially your risk tolerance level on the trade. We recommend setting a more conservative level of 2.5% to avoid blowing up your account | |
| Margin Factor | Spread betting is a form of leverage which will produce a higher margin factor. As a starting point, use a conservative margin factor of 10 for spreadbets | |
| Share Price | Your entry price will typically be a few points above a flag high. You may input your entry price from the OVI charts (in decimal points) here and we’ll convert it to a spread bet price for you | |
| Slippage Factor | An optional input field. Can be skipped if you are unsure of the amount of slippage by your broker | |
| Initial Stop | Your stop loss price will typically be a few points below a flag low. You may input your stop price from the OVI charts (in decimal points) here and we’ll convert it to a spread bet price for you | |
| Outputs | Max Cash per Trade | Max % Cash per trade X Share Price This is the maximum amount of cash that you can place into a trade. We call this your absolute risk threshold. It is calculated based on your risk tolerance level for the trade and will not be affected by your margin factor. |
| Spreadbet Price | Share price X Spreadbet price factor Your buy order will be filled at broker’s “Ask” price which is marked above the original share price. The spreadbet price factor is currently based on IG Index’s pricing algorithms which differs based on the stock price. We recommend double checking this value against your broker’s “Ask” price before placing your trades | |
| Initial Stop Spreadbet Price | Initial Stop X Spreadbet price factor Your buy order will be filled at your broker’s “Bid” price which is marked below the original share price. The spreadbet price factor is currently based on IG Index’s pricing algorithms which differs based on the stock price. We recommend double checking this value against your broker’s “Bid” price before placing your trades | |
| £ per Point* | Max Cash per Trade/Spreadbet price X Margin factor This is the amount of money you will place to bet on the spreadbet prices offered by your broker. It is commonly referred to as your “stake”. Your stake will increase when your margin factor increases You typically do not want to place a stake that is higher than what is stated here as that will exceed your risk tolerance level | |
| Trade Value (max risk) | £ per Point X Spreadbet Price Your maximum risk if the stock price drops to zero. This will increase when your margin factor increases | |
| Cash Required | min[Trade Value/10, Max Cash per Trade/10] This will never exceed your risk tolerance level or absolute risk threshold. It will be capped at your absolute risk threshold when your margin factor increases beyond your risk tolerance | |
| Practical Risk per Point | (Spreadbet Price – Initial Stop Spreadbet Price) / 100 Since this is based on a per point basis, it is not affected by your margin factor | |
| Practical Risk* | Practical Risk per Point X # Shares This will increase when your margin factor increases | |
| Practical Risk on Cash | Practical Risk/Cash Required This will increase when your margin factor increases | |
Practical Risk on Trade Size | Practical Risk/Trade Value This involves only your practical risk per point and your entry price. It is not affected by your margin factor | |
Practical Risk on Account* | Practical Risk/Trading Capital This is the percentage amount of your account that you are risking on the trade. It will increase when your margin factor increases. You typically do not want this value to be higher than your risk tolerance level (Max % Cash per trade) |