I realize this is quite a subjective matter (risk and position sizing)…however, I just wanted to see how others handled trading risk…
example 1:
$20000 acct (60 min chart EUR/USD)
1% risk… S/L 35 pips T/P 70 pips
position size: 57,143 units
amount risked: $200
reward: $399.70 (2R)
not a bad scenario at all…IMO
example 2:
$20000 acct (60 min chart EUR/USD)
2% risk… S/L 35 pips T/P 70 pips
position size: 114,289 units
amount risked: $400
reward: $798.00 (2R)
much greater reward, but if one was to incur 10 losses in a row, we are now looking at a $16000 acct that was a $20000 acct
please take into account that a trailing stop should be used to cut losses short. so the potential risk would go down in most trades…but the 1% and 2% risk model is worse case scenario
would you rather have longevity risking a maximum of 1% and still making good returns?
…or wound you rather risk great returns in the short term, BUT possible ruin in the long term due to heavy drawdown?
not saying this will happen, but it is much more likely if 2% is risked rather than 1%
I use 10%, 25%, 50% or 100% per trade. I don’t really believe in the 1/2% mantra/holy grail of compounding to make millions. It might work for some (very few) but at some point your trades become of a size where you psychology is messed up by even a short string of losses.
I start the week with a limited account, maybe £300 to £400, usually with a 25% trade, lets say 1 out of 3 weeks I’ve doubled my account by Wednesday and withdraw my initial deposit. As it goes these are the weeks when I feel “hooked up” to the market and might double it again, withdraw 50%75% and have a mad punt on the nfp or something with someone elses money (I never consider it mine until I’ve withdrawn it).
The other 2 weeks I will probably get margin called on one and break even one the other.
Don’t copy me btw I break loads of rules, I move stops, I revenge trade, sometimes don’t use a s/l plus others. I had a choice to change my psychology to suit trading or change my trading to suit my psychology and the later has proved better for me, others probably have more self disipline/impulse control.
Slowly I increase my weekly allowance but stay within my comfort zone. So in conclusion, I don’t compound so I probably won’t be a millionaire from trading but I make a modest profit (this year at least).
I trade with the trend following a pull back at an S/R level, pretty much as simple as that.
Losses happen and they happen a lot, so it might be a good idea to aim for capital protection if you’re a newbie.
At the end of the day though, it’s still up to you. How much can you risk per trade without being too emotionally invested in your outcome? Focus on the process!
Well I did expressly say not to follow my advice but thanks to the old hands for showing their wisdom by repeating it.
BUT sorry old wise old hands there is more than one way to skin a cat. If we’re being honest here so many of the golden rules you all spout are just, shall we say, very in the box thinking.
Look at the classics - Don’t move SLs, Why not? It just like a new trade at a better price if your signals are still valid.
Don’t revenge trade, Why not, same as the above
Use 1% 2% of account per trade, possibly the oldest and most pointless, trade in your comfort zone based on win/lose ratio, risk aversity etc, etc.
OP the posters with huge post counts are heavily invested in what they’ve been taught then preached for years but lets face it why are they here, are they good, do they offer anything new or just the same old. generally losing strategies, all be it they die a death by 1000 cuts.
Take any advice you like but you know if they critise a profitable trader doing something they don’t it is not your interests they have at heart it is theirs.
I do something different and told you about it, some people don’t like that.
You are right. There are so many rules of what we should or shouldn’t do. We are free to choose or create the strategy that we want and what we think that it will work for us. Though, there’s always reasons why people choose to follow a minimal risk versus of what you are suggesting. Maybe because it is proven that it is the way to go… Base on your conclusion above, you know for a fact that what you are doing won’t make you millionaire…but hey, its your choice and it is completely understandable…
Hey, I get a car and a holiday a year and some good entertainment out of trading, I’m not fooling anyone, I’m not kidding myself I’m going to make millions (are you, really? babypips, noobie island is a great place for wanabee millionaires). Shakes head Lol
Sorry RC post 9 was a joke, sarcasm is truely a low form of wit.
Oh and any questions you feel were directed towards you were, infact, rhetorical. The thread is about what % we risk per trade, asked and answered. Some of you felt the need to find fault with my answer so I briefly elaborated. Maybe we should start a myth busting thread to keep this a bit on topic, or a myth confirmation thread as the case maybe.
EDIT: So to be fair to those helpful souls who decided to criticise my money management, a fuller picture would be to say I have a trading fund of say £4k. I choose to have £400 available in an active (spread betting/tax free) trading account on a Sunday night. That is my weekly limit, a 25% trade represents 2.5% of my total fund. This management style keeps me in my comfort zone although margin calls are not unfamiliar, it just means I’m done for that week. This is how I protect my equity. I’m sure a sucessful compounding trader exists out there but I’ve yet to see long term evidence of one, including our helpful friends from this thread.
No real need for the gasps of horror, headshakes and lols
LOL! At last we have it! Admire your honesty! PM me and I’ll give you a super simple ‘strat’ that beats your current ‘strat’ hands down, judging by your posts? Leverage the hell out of it!
Nope your still not getting it LOL etc. Risk wharever % of your account you want, the 1/2% thing is a TOTAL red herring. Only have money in your account that you can afford to lose and if you wish to keep some equity separate then manage your funds like I do. RC that’s 3 of my posts you have failed to understand PM me for a full explaination of this one if you are struggling :5: lol
The 1/2% thing is fine if you buy into the “compounding your way to millions” holy grail, you might have guessed, I do not. Regular, decent sized trades, withdraw when you can and buy something nice.
Nope you’re still not getting it, obviously deliberately but hey, however you get your internet kicks is fine with me :18:
I will only have equity in a live account that I am willing to lose in a week, be it £300, £400 £800 whatever, I am currently using £400. £400 is my trading balance, do you follow? I may trade £400 in one position type trade if I want to. I won’t use some “compounding my way to millions” fantasy to limit my trade size, I use my comfort zone and the precieved strength of a trade to decide my risk.
What I would like you RC to understand is I’m not interested in compounding, do you understand this? I think you do. Heck if I wanted to could say my trading capital is £50k and you could calculate my % per trade if you want but it is irrelevant to my management but again I know you understand this and are simply point scoring.
I said and I quote " a fuller picture would be to say I have a trading fund of say £4k" as an example of funds available, I could increase this but realistically if I lost this much, in lets say six months or so I’d would have a break from trading. The capital is not the important part, it doesn’t make me money, the account balance is what makes money.
I’m sure you’ll pick holes in this approach, no problem but I can tell you it works for me and therefore may work for someone else so I will let others know if that’s ok with you, of course.
Of course I was joking, I risk 0.01% per trade and if I’m feeling saucy 0.015%