How much should I cut my position size when the VIX is elevated?
Enter Your Normal Risk and the Current VIX
Set the VIX level where you start scaling down and the level where you cut to your minimum size. The tool scales your risk between them.
Your Result
Fill in the fields on the left and click Calculate to see your suggested size multiplier.
How this is calculated
Below your comfort threshold, this tool suggests your full normal size. Between your comfort threshold and your max threshold, it scales your size down in a straight line. At or above your max threshold, it suggests your minimum size floor.
The VIX measures the market's expected volatility over the next 30 days based on S&P 500 option prices. It does not tell you which direction the market will move, only how large a move option traders are currently pricing in.
This is a simple linear scaling rule, not a market-timing signal. It exists to keep your dollar risk roughly proportional to how much the market is currently expected to move, since a normal-size position in a high-volatility environment carries more dollar risk than the same position size in a calm one.
Default thresholds of 20 and 35 are common reference points traders use to describe calm versus stressed markets, not fixed rules. Adjust them to match your own experience and risk tolerance.
Enter the current VIX value yourself from your own data source. This tool does not fetch live market data.
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.
Size Down Before the Market Forces You To
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