◆ Risk Management System v1.0
Position
Sizing
Engine
Control risk. Execute with precision.
Qty adapts to risk — not the other way around.
01 / Calculator
Inputs
$
Your total account balance%
% of equity you're willing to lose$
$
$
Used to calculate R:R10%
1%25%50%75%100%
The hand brake — caps total capital deployed
Results
⚠ POSITION CAPPED BY MAX EXPOSURE RULE
capped
Final Shares
10
Capital Used
$1,000
Actual Risk $
$50.00
Actual Risk %
0.500%
02 / Raw vs Final
Raw — Uncapped
Raw Shares
20
Position Value
$2,000
Risk Amount
$100.00
Final — ExecutedCAPPED
Final Shares
10
Position Value
$1,000
Actual Risk
$50.00
↑ Cap reduced shares from 20 → 10. Actual risk fell from $100.00 → $50.00. You are NOT always able to use full 1% risk.
03 / Max Position % Comparison
| Max Pos % | Max $ Cap | Shares Allowed | Final Shares | Capital Used | Max Loss | Actual Risk % |
|---|---|---|---|---|---|---|
| 1.00% | $100 | 1 | 1 | $100 | $5 | 0.05% |
| 5.00% | $500 | 5 | 5 | $500 | $25 | 0.25% |
| 10.00%CURRENT | $1,000 | 10 | 10 | $1,000 | $50 | 0.50% |
| 20.00%REQUIRED | $2,000 | 20 | 20 | $2,000 | $100 | 1.00% |
| 50.00% | $5,000 | 50 | 20 ⚠ | $2,000 | $100 | 1.00% |
04 / Step Breakdown
1
Risk Amount
$10,000.00 × 1% =
= $100.00
Maximum dollar amount you are willing to lose on this trade.
2
Stop Distance
|100.00 − 95.00| =
= $5.00
Distance between entry and your invalidation level.
3
Raw Quantity
$100.00 ÷ $5.00 =
= 20.0000 → floor → 20 shares
Raw position value: 20 × $100.00 = $2,000.00
4
Cap Enforcement
$10,000.00 × 10% max =
= $1,000.00 max allowed
⚠ RAW ($2,000.00) exceeded cap → position reduced
5
Final Output
Final qty: 10 shares
= $1,000.00 deployed
Actual risk: $50.00 (0.500% of equity)
05 / Scenario Analysis
Scenario A — Full Risk Used
Position fits within your max exposure. Full 1% risk is deployed.
Shares20
Capital Used$2,000.00
Max Risk$100.00
Risk %1%
✓ System allows full risk. Position size is determined purely by your stop distance.
Scenario B — Capped Execution
Your stop is tight. Raw qty would require $2,000.00 — exceeding your max cap.
Raw Shares20
Final Shares10
Actual Risk$50.00
Actual Risk %0.500%
⚠ Capital cap overrides risk. Actual risk reduced to 0.500% of equity.
06 / Risk Management System
1% Rule
Never risk more than 1% of your account on a single trade. A string of losses cannot wipe you out — even 10 consecutive losses only reduces equity by ~10%.
10% Cap
Cap total capital deployed per position. Tight stop losses mathematically require massive share counts — the cap prevents over-leveraging regardless of stop.
Why Both
The 1% rule controls your loss per trade. The position cap controls your capital exposure. Together they eliminate the two most common ways traders blow up accounts.
07 / Risk Scaling by Market Condition
| Condition | Risk % | Rationale |
|---|---|---|
| Normal market | 1% | Standard operation. Full risk deployed. |
| Drawdown (−5% to −10%) | 0.5% | Reduce size. Let the account stabilize. |
| Heavy loss (>−10%) | 0.25% | Minimum size. Preserve capital. Rebuild. |
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