Start with the nearest loss floor
A risk budget is the amount of additional loss your account can tolerate while remaining above its applicable thresholds. It is not the nominal account size. Check daily and overall rules separately and identify whichever leaves less headroom.
For a generic example, equity of $49,400 above a daily floor of $48,500 leaves $900 of daily headroom. If the overall floor is $48,800, the tighter headroom is $600. These are illustrative levels, not a quote of a particular programme’s rules.
Allocate loss across all open positions
Three trades each risking $200 can put $600 at risk together. If they all depend on the US dollar moving in the same direction, they are not three independent opportunities in any practical sense.
Include existing floating losses when planning the next trade. A previously profitable position can reverse, so avoid treating unrealised gains as a permanent increase in your budget. Check pending orders too: several may trigger during the same move.
Allow room for execution costs
A stop-loss estimate should include the spread, commissions where applicable and a buffer for slippage. A stop is not a guaranteed fill at the exact price, especially during a gap or a fast market.
In the $600-headroom example, assigning the full $600 to stop-loss estimates leaves nothing for worse execution. A trader who reserves $150 for uncertainty has $450 left to allocate. The right buffer depends on the instruments and conditions; this is arithmetic, not personalised investment advice.
Do not increase size to chase the target
A profit target does not expand the loss allowance. After a loss, the remaining headroom can shrink even if the target feels further away. Calculate the new budget before placing another order.
Choose an evaluation only after testing whether your strategy’s losing sequences fit its rules. Account size, risk thresholds and entry fees belong in the same buying decision. Passing or receiving a reward is never guaranteed.
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