Having difficulty in determining the amount of loss i can afford

[David_Branco]

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[PepenS]

If we are able to control the risks in our trading then it will become a lot more easier for us to do our trades as we all know that with low risks we are able to manage our trading very well and the losses will also start to come down

We need to train this kind of management time by time because there will be much cases that we will face along with our trading activities…

[David_Branco]

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[paull3000]

I think you are taking the wrong approach. Don’t go into live trading yet. Keep on demo until you can answer that question yourself.

To be more clear: a s/l should be a function of your expectancy, if you know, for example, that your system can produce 50% winners. has a 2:1 risk reward and normally has strings of loses of 3 - 5 then you could easily determine how much you can “afford” to lose in each trade not to put your account at risk.

But from the nature of your question I can asume you are still far from really knowing and understanding the possibilites of your system. I’d say there’s no need to risk real capital, even if you can afford to lose it all, for now.

[Royalblood]

Yes, it is a fact that when the risks in our trades will be less then the chances of getting a good and reliable income from our trading will increase

This happens because our mind is not pressurized to achieve the goal set by us. Thus, we tend to explore the true potential we possess and this helps in achieving the success which we desire.

[JonatanQ]

Technically, you can not lose more than your initial deposit, as the broker will keep a certain amount as margin, and close automatically all open positions as soon as you reach this amount, typically 25 percent of your total margin. Beyond that, you need to decide how much you are willing to risk. It depends on the money management system you use, based on your strategy expectancy. Always risk only 1 percent of your account will not be the best choice probably. Even though you will control losses, you will not optimize your rewards. Once you know your strategy expectancy you can use a mathematical money management model that will optimize your overall performance. Another aspect is psychological, and the maximum loss you will be able to tolerate at a given moment.

[John_Sanders]

Technically, you can not lose more than your initial deposit, as the broker will keep a certain amount as margin, and close automatically all open positions as soon as you reach this amount, typically 25 percent of your total margin. Beyond that, you need to decide how much you are willing to risk. It depends on the money management system you use, based on your strategy expectancy. Always risk only 1 percent of your account will not be the best choice probably. Even though you will control losses, you will not optimize your rewards. Once you know your strategy expectancy you can use a mathematical money management model that will optimize your overall performance. Another aspect is psychological, and the maximum loss you will be able to tolerate at a given moment.

It is a simple fact that if the trading margins that we are using are more then we will be able to do our trading easily and with lower amounts of losses in the long run…