help with my newbie questions

[newbietrader]

I read that you shouldn't risk more than 1% of your trading capital per trade, but how can you be sure you won't lose more than that? If the price goes far enough against you the loss could be much greater than 1%. Is the 1% maximum risk supposed to be set in place with a stop loss? For example, with a $10,000 account would you calculate the pip value of $100 and set your stop loss at no more than $100 worth of pips? Even then the brokers don't always fill your stop loss in time so how can you really only risk 1% per trade?

My other question is what leverage should be used to make an average of $50 a day with a $10,000 account and is it a realistic goal for a newbie??

Also, why are the opens of new candlesticks not always equal to the close of the previous candlestick?? Since the candlestick started immediately after the previous one, shouldn't the open of it always be equal to the previous close and not above or below it?

[rhodytrader]

Originally Posted by newbietrader

I read that you shouldn't risk more than 1% of your trading capital per trade, but how can you be sure you won't lose more than that? If the price goes far enough against you the loss could be much greater than 1%. Is the 1% maximum risk supposed to be set in place with a stop loss? For example, with a $10,000 account would you calculate the pip value of $100 and set your stop loss at no more than $100 worth of pips? Even then the brokers don't always fill your stop loss in time so how can you really only risk 1% per trade?

My other question is what leverage should be used to make an average of $50 a day with a $10,000 account and is it a realistic goal for a newbie??

Also, why are the opens of new candlesticks not always equal to the close of the previous candlestick?? Since the candlestick started immediately after the previous one, shouldn't the open of it always be equal to the previous close and not above or below it?

Last question first. The open of any given candlestick is the first quote/trade of that period. This may or may not be the same as the close of the one prior to it. That's why they don't always match.

Your second questions is way to general to be able to answer with any kind of accuracy. It's very much dependent on the system/method you trade and how it performs on a daily basis.

In terms of your first question, you are correct. To prevent a loss of more than 1% you would use a stop, realizing that sometimes your fills won't be exactly on that price.

To that point, though, I am strongly against the approach you outlined of saying I am willing to risk $X so I'm going to set my stop at a point based on that. Your trading method should included determining an exit point where you would want to get out if the market goes against you. Based on where that point is and how much risk it means, you then size your position to match the % risk you are willing to take.

If you think the other way you would probably end up trading too big and putting your stop too close, almost guaranteeing it gets hit.

[pipgod]

rhodytrader,

Good info, good post.

I have nothing to add.