Question 1

What is total account risk?

Accepted Answer

Total account risk is the sum of all individual position risks across your open trades. If you have 5 trades each risking 1%, your total account risk is 5% — meaning if all 5 stop losses trigger simultaneously, you lose 5% of your account.

Question 2

How much total risk is too much?

Accepted Answer

A commonly cited guideline (from Van Tharp's work on position sizing) suggests capping total portfolio risk at 6% of account. Above this threshold, a correlated market event that stops all positions out simultaneously can cause severe drawdown.

Question 3

Why can all positions stop out simultaneously?

Accepted Answer

In financial crises or high-correlation events (e.g. USD strength affects all USD pairs, crypto market panic affects all coins), seemingly uncorrelated positions can move against you at the same time. This is why total exposure matters alongside per-trade risk.

Question 4

Should I count all open positions in this calculator?

Accepted Answer

Yes — include every trade with an open stop loss. Paper trades and demo trades should not be included. The goal is to see your real-world maximum loss if all current stops trigger at once.

Account Risk Calculator