Trade Setup Calculator
The Trade Setup Calculator is a tool to aid in your trading decisions. Understanding that all trading involves risk is essential, and the calculator's suggestions are based on the inputs provided. Always perform due diligence and consult with a financial advisor if unsure about your trading decisions.
How to Use the Trade Setup Calculator
Entry Price: Enter the price at which you plan to enter the trade. This should be the current price of the stock or the price you anticipate buying at.
ATR (Average True Range): Enter the Average True Range of the stock. This is a measure of volatility, and you can find this value on most financial websites that provide stock analytics.
Investable Cash: Enter the total amount of cash you have available to invest in this particular trade. This is not necessarily your entire investment portfolio but the amount you're allocating to this trade.
Risk Amount: Enter the dollar amount you are willing to risk on this trade. This is the maximum amount you're comfortable losing if the trade doesn't go as planned.
Calculate Trade Setup - Click the Calculate button to process your inputs and compute the trade setup based on the Volatility Stop method
Review Results - Stop Loss: The calculator will display the calculated stop loss level. This is the price at which you should consider exiting the trade to minimize losses, based on the ATR and your specified risk multiplier.
Shares to Purchase: Based on your investable cash, entry price, and stop loss, the calculator will suggest the number of shares you should consider buying to stay within your risk limit.
Exit Points: The calculator provides four exit points for your trade, each corresponding to a different risk-to-reward ratio (2:1, 3:1, 4:1, and 5:1). These are price levels at which you could consider taking profits, depending on your trading strategy and risk appetite.
Tips for Effective Use
Review Financial News: Before making any trade, reviewing the latest financial news and stock analysis for any factors that might affect your trade is a good idea.
Double-Check Inputs: Ensure that the ATR and other inputs are up-to-date and accurate. Stock volatility can change, so using the latest information is important.
Risk Management: Never risk more than you can afford to lose. The suggested risk amount should be a small percentage of your overall trading capital.
Exit Strategy: Have a clear exit strategy in place. The provided exit points are suggestions based on mathematical calculations, but you should consider other factors such as market conditions and your trading goals