NubraNubra Risk Management Calculator
Plan a long trade's position size, risk-reward and breakeven rate before entering.
What is it
What does risk management mean for a trade?
Risk management is the decision you make before entering a trade: how much of your capital you're willing to lose if the trade goes against you, and exactly how many shares or lots that limit allows you to take.
It says nothing about whether a trade will win. What it controls is the size of the damage when it doesn't, so a losing trade is a small, planned cost rather than an event that changes how much capital you have left to trade with.
How it works
The three numbers that make up trade risk
Position size, risk-reward ratio and breakeven win rate are derived from your capital, entry, stop-loss and target.
The 1% rule is a trading discipline, not a SEBI rule or exchange requirement. The maths works for any risk percentage you choose.
Example
Example: sizing one trade end to end
Rs.5,00,000 capital, 1% risk, entry at Rs.1,000 with a stop-loss at Rs.950 and a target of Rs.1,150.
| Input / result | Value |
|---|---|
| Capital | Rs.5,00,000 |
| Risk % | 1% |
| Risk amount | Rs.5,000 |
| Entry / stop-loss / target | Rs.1,000 / Rs.950 / Rs.1,150 |
| Risk per share / reward per share | Rs.50 / Rs.150 |
| Position size | 100 shares |
| Risk-reward ratio | 1 : 3 |
| Breakeven win rate | 25% |
This setup needs to win one trade in four to break even before costs. A 1:1 target with the same stop would need a 50% win rate to stay flat.
How to use it
4 steps to size and screen a trade
- Set your capital and risk %Decide the capital you're trading with and how much of it you're willing to risk on this one trade. 1% is a common starting point.
- Enter your entry and stop-lossThe gap between entry and stop-loss is your risk per share. It determines the maximum position size.
- Add your target to see the risk-reward ratioEntry to target is your reward per share. Comparing it with risk per share gives the risk-reward ratio.
- Check the breakeven win rate before you enterEvery risk-reward ratio implies the win rate you need just to break even. A plan that cannot realistically meet it may need adjusting.
Why it matters
Why check this before every trade, not after
- One bad trade can't do outsized damageSizing every trade to a fixed risk percentage means a stopped-out trade costs roughly the same small amount every time.
- Screens out poor risk-reward before you enterA tight target and wide stop need an unrealistically high win rate. Checking the ratio upfront filters those trades before capital is committed.
- Keeps your win-rate expectations honestThe breakeven win rate stops you from assuming a trade is good just because the chart looks convincing.
FAQ
Frequently asked questions
What is risk management in trading?
Risk management means deciding before entering a trade how much capital you are willing to lose, then sizing the trade so a stop-loss hit stays within that limit. It controls the damage when a trade does not work, not whether it wins.
What is the 1% rule and is it a SEBI requirement?
The 1% rule is a common trading convention, not a SEBI or exchange requirement. It means risking no more than 1% of trading capital on one trade so a losing streak erodes capital gradually rather than all at once.
How do I calculate position size from my risk percentage?
First calculate the rupee risk amount as capital multiplied by risk percentage. Then divide it by risk per share, which is entry price minus stop-loss price, and round down to a whole share.
What is a good risk-reward ratio?
Many traders look for at least 1:2 and some prefer 1:3 or higher. There is no universal ratio: a lower ratio needs a higher win rate, while a higher ratio can work with fewer winning trades.
How does risk-reward ratio decide the win rate I need?
Breakeven win rate equals risk divided by risk plus reward. A 1:2 setup needs roughly a 33% win rate, while a 1:3 setup needs about 25%, before trading costs.
What is risk of ruin and why does it matter?
Risk of ruin is the chance a losing streak depletes trading capital before a strategy has time to play out. It increases sharply as the percentage risked per trade rises.
Does good risk management guarantee I will not lose money?
No. Losses remain possible. Risk management aims to keep single losses small and survivable, so a realistic losing streak does not force you out of the market.
This page explains position sizing, risk-reward ratio and breakeven win rate for educational purposes. It is not investment advice, and no risk percentage or ratio shown here guarantees a profitable outcome. Always confirm your own risk tolerance and position sizing before placing a trade.