Hello, I"m a new trader and I just started FTMO 10K challenge and they allow a max 5% DD each day and max 10%. So how much risk I should take every day 1 or 2 or 3%? Please let me know. Thank you.
As someone who has failed ftmo 4 times and passed the 5th (no joke). Here are couple of things I had to understand before I passed it. But before I do, just so you know I am a very conservative trader. Everyone might trade their FTMO account differently.
1- With FTMO, if you took the $10000 account, what you are really trading with is $1000. The $9000 left is only there for margin to allow to take multiple trades at once, if you confident in your strategy but all within $500 daily max loss. So overall you are only allowed to trade $500 of $1000 per day. So it’s best to go in with a mindset of « My capital is $500 ».
2- Knowing that, your risk should be 0.5% of $10000 (0.05% of 1000) for each trade you take, or a cumulative of 0.5% risk if you have multiple positions opened at once. Mathematically speaking, you are safer long term if you risk only $50 per trade, in a $500 capital.
Now here is the thing. I said earlier that I am a very conservative trader. And here is why.
A $50 Risk per trade or a cumulative of trades sounds nice for a $10000 account as it allows you to have 10 trades per day to reach you max loss. By calculation you will have to lose 10 trades to blow your $500 daily capital.
Problem is this is only suitable If you have a trading strategy that gives you high RR and limits your entries per day. If you do then $50 per trades is heaven.
To be more specific my strategy for instance allows me to take only 3 trades per day, with the probability to win 1 of 3 trades guaranteed each day. In my system, my smallest RR being 1:5 at the minimum like the picture of this current trade I am in
A 1:30 RR max (usually 2/3 days trades during trending market conditions), and 1:10RR is the average.
Therefore from a Risk Management perspective I am more than ok losing 2 trades at $100, to then make $250 on the next trade. That way my $500 capital is almost never even close to be reached even if I lose 3 trades in a row ($150). I am in profit while being extremely underexposed to significant daily drawdowns. And even then because I like to be super conservative, I often fluctuate my risk between 0.3% and 0.5%, depending on the market conditions of The instruments I want to trade on that day
However if you are a scalper then 0.5% Risk on $10000 is a death sentence unless your strategy is top notch. Because not only scalping can easily give you 10 trades per day, which you will likely take from a scalper mentality perspective, but, it also exposes you to the probability of losing 10times. Now even if you win 15 times after that, You are way too exposed, in that manner IMO. Therefore, bringing your risk down to 0.1% - 0.2% on a $10000 account, gives you more room for errors by increasing you total trades per day to 25-50. You will have to lose 25 - 50 trades in one day to blow your $500 daily capital.
So to recap:
You need to determine which trader you are. The one who can let his trade run for 4-8h and with minimal entries per day (1-3 trades) or the one who can trade each 5min candles (5+ Entries per day)
If you are more of a swing trader, High RR trader, tight stop loss or not, as long as you have a set limit of trades per day, then 0.5% is a bliss.
If you are a scalper, aggressive or not, please keep your risk at 0.2%, to at least give yourself room for errors due to taking multiple set ups per day, all while at the same time insure the longevity of your FTMO account,
Sidenote: Every drawdowns are calculated in your max daily loss, even if your trade goes in to profit
Understood and thanks for your detailed explanation. God bless you and wish you success as well.
It is not about every day. It is about per trade. You may risk 1% in every trade. If you keep making losses in 3/4 trades in a row in a day, you may want to skip trading on that day. If you can maintain a good ratio of winning and you feel good mentally, keep trading.
Every day I try to take a 1% risk. And I want to get a reward of 2%, which increases my profit percentage a lot.
You must do a proper and thorough analysis of the Forex Market before you get involved in the Forex Market.
Though there is no particular rule for that if you want to manage risk and your money, you must risk 1% to 5% per trade. This way you will be able to trade for longer and can even get more experience by not putting all your money at risk.
I think that it already depends only on the trader himself and his skills. Accordingly, at the beginning of a career, the best choice is 1% of the deposit amount.
A common rule is that a trader should risk (in terms of the difference between entry and stop price) no more than 1% of capital on any single trade.
Start with 1% it really depends on how many trains they are taking
It is up to your risk appetite. But as a golden rule, most experienced traders recommend not risking more than 2% per trade. This gives you a fair chance of making money and not making big losses in case the market moves in the opposite direction.
I think that it is not worth risking more than 1% of the deposit. I think this is quite the best option now.
Hey! Welcome to forex trading. As for your question, I think that you should risk around only 1% of your capital during your FTMO challenge. It’s because you don’t know whether you will be getting profits and losses.
well, so probably you need to look at your budget and start from this already