Guides

The reasoning behind the numbers.

A calculator gives you an answer. It does not tell you whether the question was the right one, which input is doing all the work, or when the answer stops being true. These are the written explanations behind our calculators and our apps — worked through with real numbers, and honest about where each method breaks down.

Trading risk

Position sizing, explained

Fix the loss first and solve for size. The formula, and what pip value, tick value and share price each do to it — worked through in forex, stocks and futures.

Read the guide →9 min Trading risk

Risk of ruin, and why 2% is the wrong default

A profitable edge can still ruin you. What the calculation measures, the drawdown table nobody looks at before they need it, and how to pick a risk figure you can defend.

Read the guide →10 min Options

Where an option actually breaks even

The payoff diagram is true on exactly one day. What delta, theta, vega and gamma do on the other days, and why being right on direction is not enough.

Read the guide →11 min Options

Implied volatility crush

Why the option you bought before earnings loses money on good news. How to read the move already priced in, and decide if you are actually being paid to take the bet.

Read the guide →9 min Portfolio

Beta-weighting: what “hedged” actually means

Turn a mixed portfolio into one index-equivalent number, size the hedge against it, and understand the assumption that fails exactly when you need the hedge.

Read the guide →10 min Self-employed

Working backwards from take-home to an hourly rate

Why salary ÷ 2,080 is the wrong sum, what unbillable time really costs, and how to solve for the rate that leaves you the take-home you need.

Read the guide →9 min Self-employed

Reserving tax on irregular income

Lumpy income makes tax feel optional until it isn't. How to set a hold-back percentage, why the first year is the dangerous one, and the two mistakes behind most tax shocks.

Read the guide →10 min Borrowing

What a lender will actually lend you

The four things a bank's own assessment does that its public calculator does not: stressed rates, living-cost floors, card limits counted in full, and tax you owe but have not paid.

Read the guide →11 min

How these are written

Every guide here is written by us, from the same work that goes into our applications — RiskDesk for trade risk, OptionsDesk for options, HedgeDesk for equity research and hedging, and CashDesk for tax and cash flow on irregular income. When a guide describes a formula, it is the formula the corresponding free calculator actually runs.

Three things we try to do consistently. Show the arithmetic. Every guide carries at least one worked example with real numbers, because a formula in the abstract is easy to nod along to and hard to apply. Name the assumption. Most of these methods rest on one or two assumptions that are fine until they are not, and we say which. State what it will not do. None of this is financial, investment, tax or legal advice, and none of it predicts a price.

Where to start

If you trade, start with position sizing and then risk of ruin — in that order, because the second one explains why the first one matters more than your entry signal. If you are self-employed, start with reserving tax on irregular income, which is the problem that causes more damage than any pricing mistake.