Should I allocate all funds?

Suppose I have 5000$ capital to trade . Should I allocate all the funds into one trading whenever a signal is seen ?

my concern is should I allocate all funds into [B]one trade[/B] or allocate some parts and keep some parts in hand and wait for [B]more trades.[/B]

I am confused at this part. How the big boys manages this professionally ?

I do swing trading - positional . I follow daily chart. I dont do day trading.

Please guide.

Depends on what your trading plan is and what you’re comfortable with risking. I scalp/day trade only the loonie so its an all in trade. However day/swing traders might be monitoring a basket of pairs and have rules like 1% a trade no more than 5 trades open at any one time. Position traders know that when they get a signal they have to trade so might be subject to greater exposure to the markets. The turtles scaled into their trades 4 times at 2% a pop and could have a max of 16 trades open at any one time.

I am sure we can help you more if we know a little bit about your style and how many instruments you plan to trade. And don’t worry about the big boys, they play a different game to you and me. Is called the scale of economics

I do swing trading - positional . I follow daily chart. I dont do day trading.

Please guide. I am very much uncomfortable … whether I should put all my funds in a trade whenever a signal is there in my system or should allocate only some parts of fund

Can you please explain this ? I dont get it.

Here’s an interesting piece that talks about “scaling”. I don’t know anything about the author but its a better explanation that what I would give

Pyramiding - A Money Management Strategy To Increase Profits | Learn To Trade

Scaling is something that probably wont be of any value to you. Now as a swing trader your formula is pretty simple - Maximum exposure divided by maximum number of trades. So If you happy with say 4% exposure and could have a max number of trades open at 8 then risk per trade will be 0.5%. Of course you will then have to convert this monitory value to a position size. All the best bro :slight_smile:

Godzilla, i think you need to seriously have a look at the school here on babypips… your question is quite frightening to be honest.

It sounds like you want to know, is wether you should place your entire account capital into one trade (i.e. those supposed $5000). Apart from the technical difficulties of doing that, I suggest you don’t do that at all… not even close. It’s understandable that you would be uncomfortable.

bobbillbrowne, you are assuming way to much experience here. As far as I can tell.

Best of luck and have fun learning at the school.

Agreed with abrsive here! Forex trading is an endeavor that involves risking your money. It’s skill, an art, and a business that should be taken seriously, which means learning and mastering the basics is very, very important. Hit up the School for a while, and I think you’ll find your own answers…and then some.

Based on the question, I’d highly suggest that you don’t trade with any money you can’t completely afford to lose. If you want to trade live, I’d allocate 1/25th of what you’re suggesting in your original post as “learning capital”.

Read up on risk management heavily- you never want to allocate your entire account to 1 single trade; that’s not trading, that’s gambling. If you want to do that, walk into a casino, and place $5,000 on RED @ the roulette table. You have a 50/50 shot @ doubling your money in less than 5 seconds.

Could you please post the link of the relevant chapters from the school which could be useful in this regard ?

It sounds like you want to know, is wether you should place your entire account capital into one trade (i.e. those supposed $5000).

Yup …you are right…I was thinking in that line.

some people are saying to have 4% exposure …what it means ? does 4% exposure is same as 4% risk capital ? are they same thing ? confused with this jargon here.

The entire thing looks very much complicated to me and painful.

if there were some KISS stuff here …

If you’re not willing to go through entire school here on babypips - and in the nicest way - - I say get out of this business. (the school is about 1/1000 of what you need to learn) maybe even 1/10,000 of what you need to learn.

There is no KISS until YOU create it.

With that - if you are willing - then good luck and good studying to you!

Thanks all. It was a nice discussion.


The usual answer would be “Don’t risk all your capital”…which holds true for all forms of business, including Fx market. The market cannot be predicted long term, in adv, all the time…heck I would gladly pay up big just to get it right most of the time…anyway, risking all your capital is not a good idea…

Actually the odds are around 48.6 %. Don’t forget about the 0

And the 00 :smiley:

Anyway OP, you should consider opening 0.1 lot for every 1k in capital…in your position that would be no more than 0.5 lots spread across all trading pairs

I think the only assumption being made here is that godzilla is going to whack on a $5000 trade with 1000:1 leverage. What if he is trading without leverage and looking to trade with a 100 pip SL n TP. Now he is only risking 1% to make1%. That’s a solid MM plan. The only aassumption I make about the markets is there is no right or wrong. Did you not read my last sentance about convertin risk to position size

Did you read his reply to my comment?

He WAS going to do what I thought he was and you WERE assuming way too much experience from the OP. There was no way in hell he was going to understand your risk to position size explanation, but feel free to continue to ignore the evidence.

Godzilla is in school, so problem solved… i’m sure he can now put all 5000 on a trade using proper MM :35:

Normally traders do not invest all the funds into one single trade, but it is all depending on what trade your are in. I suggest you to go with multiple trading. It has low risk.

I will recommend to develop a trading strategy and follow it. Putting all your money in one trade is more like gambling.

Thank you guys. Those comments helped me tremendously. I have incorporated Risk Management in my trading now …Its going fine …Thanks for your time.

I hope this helps. Risk before Reward



$5000
leverage used 100
Stop loss 50 pips
Risk 1-2-3%