Why use the Risk Calculator?
The risk of losing your money is always present when trading. The risk calculator on TradeLocker is a powerful tool that can help you effectively manage that risk.
It allows you to set up a Stop Loss (SL) price and specify the dollar amount you are willing to lose if the market moves against your position. As a result, it will automatically calculate the order amount based on these inputs.
By using the risk calculator, you can minimize potential losses, maintain a disciplined approach to trading, and optimize your chances of success in the market. Risk management is about balancing potential rewards against potential losses, ensuring that emotions don’t override rational decision-making, and maintaining security by not overextending your capabilities.
Using the risk calculator is an effective way to manage risk in trading. By predetermining your SL price and the amount you are willing to lose, you take proactive steps to protect your investments.
Step-by-step guide to using the risk calculator
Go to the risk calculator tool in the order panel.
Set the SL price on the chart
Set the SL price on the chart which is the price at which your position will be automatically closed to prevent further losses. This is a crucial step in defining your risk limit.
Evaluate what you are willing to lose
Input the maximum dollar amount you are willing to lose if the trade does not go as planned. This amount should be a reflection of your risk tolerance and trading strategy. Once you input the SL price and the dollar amount for potential loss, the order amount will get automatically calculated. This is the amount of the asset you should trade to stay within your specified risk limits.
Adjust
If you are not comfortable with the calculated order amount, you can go back and adjust the SL price or the dollar amount until you find a balance that suits your risk tolerance.
Execute trade
Now you can proceed to execute your trade.
You can also use the expanded order panel in order to calculate your risk. Here is how:
For a more detailed walk-through, check out our tutorial on YouTube.
For those who want to learn more, here is another useful guide on how to use the SL&TP calculator on TradeLocker.
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