The elements include in the risk management and computed by The Stock Butler are based on

  • your current equity
  • your default risk defined in your user profile
  • the risk per share including the price buffer
  • the transaction cost defined in your user profile (option in your user profile click here to see if it is activated)

The Stock Butler will automatically calculate the number of share (or lot) that you could buy base on these factors.

The current equity
The current equity is your initial equity plus the P&L of all your closes trades. The trade that are currently open or not filled yet don't count. 

The risk per share
The risk per share is the entry price (including the buffer) minus the exit price (including the buffer).
For example, if the 55 days high is $100, the buffer is $0.10 and the exit price is $90 with the same buffer for a long position. We have $100.10 - $89.90 = $10.20 per share.

The default risk per trade
If we have a default risk of 1% and an equity of 100k, this means that you will have a risk per trade of $1000. Therefore, we have $1000 minus the transaction fee of available risk. 

The transaction cost
If we have defined a $75 per transaction in the user profile this means that we have $150 of transaction per trade (in and out). Therefore, the current risk per trade is $1000 - $150 ($75 per trade) = $850.

So the number of share that you could buy will be the risk per trade divide by the risk per share. In our example this gave $850 / $10.20 = 83 shares.

Note on the "Create Order" Form
In the order form, you will see the the risk invested (in cash) equal as your (default risk x the current equity) - the transaction cost.



Happy trading!