How much more can I risk on a correlated forex pair without breaching my risk budget?

Enter your existing dollar risk on Pair A, the correlation coefficient to Pair B, whether the trades are in the same or opposite direction, and your maximum combined risk budget. The calculator solves the combined-risk formula backward to find the largest risk you can still take on Pair B.

What happens if Pair A already uses up my whole risk budget?

If Pair A's own risk already meets or exceeds your budget, the calculator returns zero room for Pair B, regardless of correlation, since even a single existing position has already used the full budget.

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How much more can I risk on a correlated pair without breaching my budget?

You don't need a better indicator. You need a process you'll actually follow at 9:31am.

Jason Parker, Founder of Trading Habits

Enter Your Existing Position And Budget

Pair A is the trade you already have on. Pair B is the correlated trade you're considering. This tells you the most you can still risk on Pair B without your combined risk going over the budget you set.

Your Result

Fill in Pair A's risk, the correlation, and your budget on the left and click Calculate.

How this is calculated

This tool uses the same combined-risk model as the Correlated Pair Risk Calculator elsewhere on this site: combined risk equals the square root of riskA squared, plus riskB squared, plus two times the effective correlation times riskA times riskB.
The effective correlation flips sign when the two trades are in opposite directions, since an opposite-direction trade on a positively correlated pair behaves like a same-direction trade on a negatively correlated one.
This tool solves that same formula backward: given riskA, the effective correlation, and the maximum combined risk you're willing to carry, it finds the largest riskB that keeps combined risk at or under your budget.
If Pair A's own risk already meets or exceeds your budget, there is no room left for Pair B at all, no matter how the two pairs are correlated.
This tool only calculates a dollar amount. Turn that into a lot size with the Pip Value & Lot Size Calculator once you know your stop distance in pips.

Risk & liability disclaimer: This calculator produces a mathematical estimate based on the numbers you enter. It is not financial advice and does not guarantee any trading outcome. Trading involves risk of loss, and past results do not predict future results. Trading Habits is not a broker-dealer, registered investment adviser, or tax professional, and is not affiliated with any broker, exchange, or data provider. We do not guarantee this tool is error-free or suitable for your situation. Always verify results independently and consult a licensed professional before making any trading or financial decision. You could lose some or all of the capital you trade with.

How much more can I risk on a correlated pair without breaching my budget?

Enter Your Existing Position And Budget

Your Result

How this is calculated

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