The five-layer risk budget
Course context: This lesson belongs to a practical beginner curriculum for Pakistan.
| Layer | Rule to write | Example learning limit |
|---|---|---|
| Single trade | Maximum planned loss including estimated costs | USD 3 |
| Correlated theme | Maximum combined loss for similar exposure | USD 6 |
| All open trades | Maximum portfolio loss if every SL executes | USD 8 |
| Day | Stop opening trades after realised + open loss | USD 10 |
| Week | Pause and review after cumulative loss or errors | USD 25 |
Position formula
Volume = cash-risk budget ÷ (stop distance × pip value per lot). With USD 6 risk, a 30-pip stop and USD 10 per pip per standard lot, volume is 6 ÷ 300 = 0.02 lot. Round down to the allowed volume step and recalculate the actual planned loss.
Add execution and cost stress
A stop is not a guaranteed final price. Create a base case and a stressed case that adds wider spread, account commission and adverse slippage. If the stressed loss breaches the single-trade limit, reduce volume before entry.
Margin and stop-out are separate
Margin is reserved collateral and can be returned when the position closes; it is not the loss cap. Higher leverage reduces required margin and may tempt a learner to open a larger position. Exness generally uses 0% stop out, but availability and protections can vary, stocks can use 100% during daily breaks, and a platform stop-out is not a personal risk plan.
Pre-order worksheet
| Field | Value to enter |
|---|---|
| Symbol and account | Exact terminal symbol and suffix |
| Entry / invalidation | Planned price and reason |
| Stop distance | Points, pips or price units |
| Pip/point value | From current calculator |
| Calculated volume | Rounded down |
| Spread + commission + swap | Current or stressed estimate |
| Correlated open risk | All positions sharing the theme |
| Base / stressed cash loss | Both must fit the written limit |
Official calculation and execution sources
Trading calculator fields · Slippage rule · Leverage and stop out
Questions from a first-time learner
Can I use required margin as the amount at risk?
No. Margin and potential market loss are different quantities.
Why round volume down?
Rounding up would exceed the cash-risk limit used in the calculation.
Does an SL guarantee the stressed loss?
No. A gap can exceed the assumed slippage; the stress is planning evidence, not a guarantee.
How do I combine several trades?
Convert each stop to cash risk and aggregate positions with the same currency, direction or market driver.