Extra risk management needed as account and position sizes increase?

Trading Discussion Risk Management Practices
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I wasn’t entirely sure if this is the right category for my questions but I’ll let you suggest an alternative board if it is more appropriate. My situation:

I’m scaling up both my account balance and position sizing after successful demo trading and small position (less than one standard lot per trade) live account trials. Both stabilized on profitable trajectories after initial losses from making many of the standard beginner learning curve mistakes. I follow an established trading plan with defined parameters for maximum percentage risk allowed per trade, risk to reward ratio requirements for trade setups, a continuous overall market analysis discipline (both technical and fundamental), trade journaling and post trade analysis, regular mindset (psychological) self-assessment, and several other aspects.

The next increment I’ll be building up to is 5 standard lot trades as long as they continue to fit within my current risk management parameter (max. 1% of account balance at risk per trade). I currently have the cash on hand to accommodate that size position but I’m not in a hurry. I don’t need nor want to get rich quick. What I do need is to continue learning by informed and disciplined experience. So here’s what I haven’t yet experienced and wonder if you have:

  1. As position size and stakes increase have you experienced any more “shenanigans” from the counterparty broker to the your retail trades like increased “slippage” to take out stops, worse or incomplete fills at the entry limits you’ve targeted, worse or incomplete fills at the closing profit targets you’ve set, or any other broker “interference” or manipulation that has compromised your profitability at higher stakes that you didn’t see at lower stakes?

  2. How do you think about or try to protect against exposure to a major, sudden market movement. Obviously stops, but all the articles on the excessive risks of forex trading always cite the decoupling of the Swiss Franc in 2015 that caused a 41% drop in 24 hours, blew through stops because there was not enough buy side liquidity and wiped out several traders’ accounts and even took down a few smaller brokers. I don’t know if there’s a failsafe preventative for that kind of event, but I have not yet encountered a violent enough move that my protective stop did not get me out within my pre-set loss parameter. Has anyone else and what other steps can you or do you take to guard against this?

  3. Are there any other additional protective measures that you take if you trade larger position sizes? Not sure where the threshold is that would qualify for this. One poster in another forum suggested that trading dynamics can get rougher once you reach institutional size lots (1,000,000 pairs and above). I don’t anticipate getting there anytime soon (maybe never), but I’m just eager to learn about any game changers I can when position sizes reach the playground of the “big boys and girls”.

Thank you for any and all wisdom you can share.

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Great post. I’m only a small time trader, however if I found myself continuously successful, I’d look into choosing Saxo bank as my broker, it being one of the safest, IMO.

However, due to the new ESMA regulations, Saxo Bank offers negative balance protection for retail clients, however, professional traders will remain unprotected from losses than can exceed the initial deposit.

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The more you manage the risk safely, the more secure the deposit will be. So every trader should always manage risk.

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Yes I think, although I usually trade on smaller lots but for that also i prefer to keep my risk only in one digit in most of the cases it’s up to 5 or 7%. I believe that it’s easy to trade with less risk because you need more trades to fail to drain your accounts and that never happens.

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Keep trade at 1% per trade. This is both the max. and the min.

Beware of doubling (or cancelling) exposure to some currencies due to correlating pairs and correlating risk tolerances of certain pairs.

Go for an account with a broker which carries negative balance protection so if your account is wiped out you cannot owe the broker more.

Hold with-trend positions (see the EUR/CHF collapse) and disregard what commentators say (see the EUR/CHF collapse).

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Thanks for sharing the information! I agree that risk management is required if you want to ensure that you don’t end up making losses that you weren’t prepared for.

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The position sizing technique determines how many units you should trade to achieve your desired level of risk. With the right position sizing, you can trade across any markets and still be able to manage your risks. As account and position size increase, you want to find the right position size for trade so you can maximize your profit in good situations while minimizing your potential losses in risky situations.

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Made good information. I think a trader can’t survive in trading without managing risk. I usually use a 1: 2 or 1: 3 risk ratio. This helps to keep the winning percentage high in the trade.