How to compute your risk in copy trading
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The short answer
A signal gives levels, it does not give your position size. That is computed from three things that belong to you: your equity, the percentage you accept risking, and the distance between the signal’s entry and stop. Copying the lot quoted by the author is the most common and most expensive mistake, because their lot is sized for their account, not yours. And if the signal carries several targets, you have to decide whether your percentage applies to the whole setup or to each order: the difference is a factor equal to the number of targets.
A signal gives levels, not a size
What is useful in a signal comes down to a few numbers: an instrument, a direction, an entry price, a stop, and one or more targets. Those numbers describe a market idea, and they are valid for everyone.
What it does not contain is your position size. It cannot, because that depends on things the author knows nothing about: how much you have on your account, how much of it you accept risking, and what currency that account is denominated in.
Put differently, a signal is copied on its levels and recomputed on its size. That is the one part of the work that is unavoidably yours, and it is almost always the part that gets skipped.
Why copying the quoted lot is the worst idea
Many channels display a lot, along the lines of « 0.50 lots ». Taking it as is means borrowing the sizing of someone you know nothing about.
Take a concrete case. The author has 100,000 on their account and risks 0.5 %, so 500. You have 2,000 and you take their lot: the same position costs you the same 500 if the stop is hit, which is 25 % of your account on a single trade. You did not copy their strategy, you copied a number that only made sense on their side.
Two less visible gaps come on top. Your account currency may differ from theirs, which shifts the calculation. And the contract size of the same instrument varies between brokers, notably between a standard account and a so-called micro account, where one lot represents ten times less. The same number describes two different exposures.
The correct calculation, using the signal’s levels
It is exactly the same as for a position you had decided on yourself, except that the entry and the stop come from the signal instead of from your own reading.
You need the amount you accept losing, meaning your equity multiplied by your percentage. Then the distance between the signal’s entry and stop. Then the value of one point of that distance for one lot of that instrument at your broker. Your size is the accepted amount, divided by the distance multiplied by the point value.
One consequence worth holding on to: a signal with a very wide stop forces a very small size. If the size that comes out looks ridiculous, the calculation is not wrong, the signal is asking you to absorb a large distance. Rounding it up to something more comfortable means increasing your risk silently.
The calculation in detail, with a full worked example, is on our page about risk per trade.
The trap of multiple targets
Most signals announce two, three, sometimes five targets. Since one order can only carry a single target, following such a signal means placing several orders, one per target.
And this is where risk runs away unnoticed. If you compute your size for 1 % and then place three orders of that size, you are not risking 1 % but 3 %, since all three share the same stop and will fall together.
There are only two coherent ways out, and one of them has to be chosen explicitly. Either your percentage applies to the whole setup, and the computed size is split across the targets. Or it applies per order, and you accept risking that percentage multiplied by the number of targets. The first is the reasonable convention; the second is defensible if you decide it knowingly. What is not defensible is not knowing which case you are in.
What the signal does not tell you
First, the absence of a stop makes the calculation impossible. A signal with no stop cannot be sized, and it is also a signal best not followed: whoever wrote it is not saying where their idea is wrong.
Then the horizon. The same entry and stop pair can correspond to a twenty-minute position or a three-week one, and that changes everything about how you will sit through it, while changing nothing in the calculation.
Finally, what happens afterwards. The author may move their stop, take partial profit, exit by hand, without the channel always announcing it. You inherit the entry, not the management. That is why your sizing has to stand on its own, without assuming someone is watching on your behalf.
How AlphaGPT handles it
You paste the text of the signal. The tool extracts the instrument, the direction, the entry, the stop and the targets, finds the matching instrument at your broker under the name your broker gives it, reads your real equity, and shows the size that follows from your percentage.
The percentage is set once and applies to the whole setup, which closes the multiple-target trap described above by construction.
What comes next, meaning the placement itself and the rejections it can trigger, is covered on our page about placing orders from a signal. Trading carries a risk of capital loss.