Expected Loss Calculator: Know the Dollar Risk Before You Trade

Expected loss is the planned dollar loss if the trade reaches the stop.

It is not the same as fear. It is not a forecast. It is the cost of being wrong under the plan.

The basic calculation

Expected loss depends on two numbers:

• Risk per share
• Position size

Formula:

Expected loss = risk per share x position size

Example:

• Entry: $60
• Stop: $57
• Risk per share: $3
• Position size: 80 shares

Expected loss:

$3 x 80 = $240

That is the planned loss before fees, slippage, or gaps.

Why expected loss matters

Many trades look acceptable until the dollar risk is visible.

A stop that is 5% away may sound normal. A 5% move on an oversized position can still damage the account.

Expected loss forces the trade into account language.

It answers:

• If I am wrong, how much money is at risk?
• Is that amount acceptable?
• Does this trade deserve that budget?

Expected loss is not guaranteed loss

A stop can fill worse than planned.

Gaps, news, thin liquidity, and fast markets can all create slippage. That is why expected loss should be treated as a planning estimate, not a promise.

The more fragile the stock, the more conservative the size should be.

Use expected loss before the order

If expected loss feels too large after the trade is placed, the planning happened too late.

The correct time to calculate it is before entry, when the investor can still reduce size, change the stop, or skip the trade.

ZISO's workflow

ZISO's Position Size Calculator shows the planned risk boundary before the trade.

It helps turn entry, stop, and account risk into position size and expected loss, so the user can decide with the cost visible.

Use the calculator here:

• ZISO Position Size Calculator

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