Jacob Bogatin: stock market and risk management system

Recently, Jacob Bogatin had a task to make some calculator that would, with a given risk value for the deal, calculate the necessary trading lot for trading in futures on the stock market. The task has been set, and it is needed to seek its solution.

The first thing Jacob Bogatin, of course, went to the Internet in search of information on this issue. Moreover, here he was very much surprised, discovering that this information is so specific that it is practically wholly absent from the network.

Having looked through an incredible number of different sites, where he read about the calculation of a lot in the Forex market, Jacob Bogatin realized that he would have to do it himself. Below, in steps, it will show an algorithm for simple actions that allows you to calculate the trading lot for FORTS futures correctly.

However, before we move on, he details the task, so that it becomes clearer why we need it.

You have all heard about this concept as a “risk management system” (or “money management system”) and probably heard about the “fixed interest method.” This method is that when opening a transaction, we risk not the entire amount of the deposit, but only a part, some small percentage. Most often this is 1-2% (“1% rule”).

So, now our task is to calculate the necessary trading lot for the transaction, but not based on the entire amount of the deposit, but only on the percentage of the sediment that we will indicate.