how it works
- amount at risk = account size x risk per trade.
- position size = amount at risk divided by the distance between entry and stop.
- risk reward = distance from entry to target, divided by distance from entry to stop.
questions
how much should i risk per trade?
many traders keep it between 0.5 % and 2 % of the account, so that a series of losing trades does not empty it. the number is yours to choose.
what does leverage needed mean?
if the position value is larger than your account, you need at least that much leverage to open it. below 1x, no leverage is needed.
what is a good risk reward ratio?
a ratio of 2 means the target is twice as far as the stop. with a ratio of 2 you break even with one winning trade out of three, before costs.