About trading 2%

Hi fellow traders,
GOOD Morning!!! I want to ask about this,For example I have 10000$ account demo then I risk the (200$) 2% in my first trade,
so how about the next trade should i need to use (200$) again for my 2% risk or I need to subtract 10000 - 200= 9800$ to get my next 2% number to trade , like this in the second trade I’m going to use the (196$) 2% to risk???
same like this?
10000-200(2%)=9800
9800-196(2%)= 9604
9604-192.08(2%)= 9411.92
and so on…

Hi - I see what you mean about bangs!

Personally, I suggest that when you start your real-money account, you limit your exposure to [B][U]1%[/U][/B] rather than 2%, at least for the first few months and/or until you see there’s steady profit made over 200+ trades.

There are (at least) three different ways of doing this, and you have to decide for yourself which one suits you.

One is to take 1%/2% of the current balance each time (at the time you open the trade), so if you’d lost 1%/2% on the first trade, you’d work out your position-size as you’ve shown above, but if you’ve won something on the first trade, you’d do the same, and your second stake would be fractionally bigger. To do this, you’ll need a broker like Oanda with infinite granularity of position-sizing.

Another way is to plan it in units of some fixed number of trades (for example, ten trades) and then recalculate the position-sizing after that number of trades and keep your stakes the same size for the next ten trades regardless of their results.

A third way is to decide that you’ll keep the stake the same size each time, until you’ve made (for example) 10% profit, however many trades that takes, and then you’ll increase it by 10%. This is riskier, because when you have a losing run, you won’t be reducing the stake each time as the balance reduces, and the proportion between your stake-size and your account-balance will actually be slightly increasing during a bad run. Some people do this, though, and [I]if your win-rate is high enough[/I], it can work out well.

This book may help you: [I]Profitability & Systematic Trading[/I], by Michael Harris (Wiley, 2007).

Thanks Lexys for being there for me to answer all my question here in forums :slight_smile:
We went in the barnes and noble to find a book about trading but its out of stock.
Okay I’m doing 1%, I’m thinking that too 2% is a high to risk.I’m doing subtract to next trade cause I’m not only trading 1 trade, I trade more!

You might be able to find PDF copies, online, of that Michael Harris book, and of [I]Trade Your Way to Financial Freedom[/I] by Van K. Tharp (really excellent book: don’t let the sensationalized title put you off!).

Be very careful with correlated pairs, then, I’d suggest: having four forex trades open, simultaneously on correlated pairs, at 1% of your account each, is exposing 4% of your account to risk all at the same time, which will eventually lead to some big accidents (I never expose more than a maximum of 1% [I]in total[/I] of my account to risk at any one time, no matter what, and usually less) … but it depends on your degree of risk-aversion: I [I]hate[/I] drawdowns … :33:

Okay Lexys. Yeah I am trading more than 5 trades on my demo but maybe once I am in real account I feel afraid to trade a lot. hehehe. I’m only trading the major pairs. Yeah like the USD/CHF and EUR/USD double trade risk. How about you Lexys how many trade you make in everyday to trade?

Well … when you trade those two in the same direction (long on both, or short on both) you’re actually [U]reducing[/U] overall risk, because a change in the relative value of the USD will have conflicting effects on the two trades (you’re buying the dollar with one trade and selling it with the other). But if you’re long on USD/CHF and short on EUR/USD (or short on USD/CHF and long on EUR/USD) at the same time, [U]then[/U] you’re effectively doubling your risk.

I never have more than one trade open at a time, but that’s easy for me to say because I trade very few instruments, and in fact the great majority of my trades are on only one instrument, which I know well. If I open a trade risking 1% of my account, then [I]sometimes[/I], if it moves into profit, I’ll add up to another 1% to it [I]after locking in the profit on the original position by moving the stop-loss[/I], so that I’ll never actually be risking more than a maximum of 1% at any moment (and usually less: 1% is only for my highest-probability entries).

I do about 100 trades per month, altogether, but many of mine are very short: I’m often in and out in 10-15 minutes. (I also take the occasional trade that ends up running for 4-5 hours, or very occasionally even longer, on a day when I happen to catch the start of a nice intraday trend with my first or second trade, but those will all be “well in profit” trades, and I’ll always be watching closely and adjusting the stop-loss as they run. I don’t really step away from the computer while I have a trade open.)

My perspective is always that when I sit down to start trading, each day, my primary responsibility isn’t “to make money on the day”: it’s to be able to sit down and start trading again the same way the [I]next[/I] day (in other words “to avoid losses”); it’s all about risk management, for me.

Thanks Lexys for the nice information. So you are scalping trader. We both same. I’m always sitting in front of my computer 7am-4pm. Whats your secret to be a profitable trader lexys? Sorry lot of question.
Cause I’m on demo but still a lot of loss than wins.

Not at all, really: “scalping” means entering the market (usually in substantial size) hoping to snatch a tick/pip or two, very repeatedly, with tiny stops, with very brief trades (typically a minute at the very most, and very often much less) and with a very high win-rate - which bears no resemblance to my trading at all! I don’t [I]think[/I] there are any scalpers in this forum (not among the regularly posting members, anyway).

I’m just an intraday trader.

We’re working similar hours, certainly.

I do a lot more on midweek days than on Mondays or Fridays. I’m working, on and off (mostly “on”) from about 8.15am to 9.00pm on Tuesdays, Wednesdays and Thursdays, but I’m only in the market about 10-15% of the time, and when I’m flat, I do all sorts of other things at the computer at the same time, such as posting here.

Things like patience, practice, and so on …

I (sort of :8: ) said, here: 301 Moved Permanently

We’ve all been there … what’s your “main method” - are you following a method that you know has an “edge”, or trying to develop your own?

Try Hit and Run Method.

Different traders have different approach to this, the best way is to set a dollar amount instead of percentages. When you fix a dollar amount, you can risk it on your each trade and good risk reward can give you good result over a certain period of time.

Why not just use your equity value as the account size figure and use 1 or 2 percent of that? This means your allocation is dynamic. If your equity is high your amount risked will move up too, increasing gains, and when your equity is lower, your risk is lower.

You could also use free margin amount for your calculation and this would prevent you from making too many trades at once, as free margin will decline with declines in margin level.

You are looking fearful as you are taking very low risk, dear with this investment you should take the 10-15% risk if you want to earn from this business reasonable amount, take the bold decision and get the fruitful result but your trading strategy should be strong.

“Fixed that for ya’”. :wink:

haha - another Babypip classic statement of 2016