Trading & Investing Guides

Clear, formula-first explanations of the concepts behind each calculator — written for traders and investors who want to understand the math, not just copy a number.

All guides

Ten in-depth guides covering the math behind SOFTYTOOLS' calculators — each one includes the formula, worked examples, common mistakes to avoid, and an FAQ section.

Risk Management

How to Calculate Position Size the Right Way

The formula behind position sizing, with worked examples for forex, crypto and stocks.

Strategy

Risk/Reward Ratio Explained (With Examples)

Why a "good" ratio depends on win rate, including the break-even win rate formula.

Trade Planning

Setting Stop Loss and Take Profit Levels

A practical framework for placing exits based on risk amount, with formulas for both levels.

Leverage

Leverage and Margin: A Practical Guide

How leverage multiplies both gains and losses, and the difference between a margin call and liquidation.

Risk Management

Risk Management in Trading: A Complete Guide

The five layers of a practical risk plan: per-trade risk, open risk, loss limits, leverage and process rules.

Risk Management

Trading Risk Percentage: A Complete Guide

How to calculate the percentage you risk and how to choose it from your drawdown tolerance and losing streaks.

Fundamentals

Position Sizing vs Risk Management: A Complete Guide

What each one does, how sizing methods compare, and why correct sizing alone does not protect an account.

Risk Management

Trading Drawdown: A Complete Guide

The drawdown formula, why recovery needs a bigger gain than the loss, and how losing streaks shape drawdown.

Performance

ROI in Trading: A Complete Guide

ROI and annualized ROI with worked examples, leveraged-trade returns and the situations where ROI misleads.

Growth

Compound Growth in Trading: A Complete Guide

The compound growth formula with contributions, and why real trading returns compound differently from a smooth curve.