Risk

The ideal risk position for newbie (in %)?

What ever you can sleep at night knowing it could be gone when you wake up is pretty good. Or the same amount you can walk over to the toilet and flush it down and not cry about it. :slight_smile:

For a newbie in this business your main focus is about survival. Take a baby learning to walk at first that baby is going to fall down a lot. Well so are you in trading and you are going to get bumps, bruises and you are going to bleed. Just how much blood are you willing to bleed. That amount is different for every one. Trading is no different.

Most will say risk no more than 2% in any given trade and I 100% agree in fact I say that should be lower much much lower. I would say dont risk more than .25% .5% at the max. Sure that is not going to make you rich but if you think you are going to just walk into this business and get rich you will most likely join the long line of failed traders that got sent home crying to mama. Then after a while and you have a proven track record and know what to expect to get consistently then you can up your risk accordingly but also guess what? You are also no longer a newbie trader either.

Sorry probably not the answer you were looking for but I hope that helps

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I agree with bobmaninc, practically 90% of traders advise to risk 2%or smth like that.
I personally rick more sometimes, but it’s not so often, so I’d say that 1-2% is perfect for a newbie. You can risk more when you’ll get more experience, but don’t be very venturous for now…

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Bro, use the search button. This subject has been discussed many many times. You will never learn to trade if you can’t use a search button.

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haha that makes sense :smiley:
there are lots of topics and books… that guy may think that someone will give him a perfect advice and than will trade for him

Thanks bro for answer my question…for the way your reply…i must say that you are successful trader.

Bro, I’m far from successful in any sense of the word. I survive. But you will find more relevant information by searching google scholar than here on babypips. The search button really is an inspiring traders best friend.

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Position size depends on your strategy… but in any case for starters you shouldn’t exceed 2%, at least at 2% it’d take you a while to lose all your account should the worst happen (and if it can, it will… as i know).

If you trade on Forex - risk managment this is most important point!

You canˇt use more that 5% margins, for all opened positions. I think that, min. deposit mus be no less 2k!

Example:

Deposit: 2k
Leverage - 1:200
Symbol: EURUSD
Margin used for 1 lot: 500 USD or 25% from deposit


Risk managment - 5% from 2k = 100 USD

Сonclusion: for all opened position we can use only 100 USD or 0.2 lots

Here is an article about basic risk management and how to calculate it. It’s useful for newbies – since you are one, but it’s probably helpful to more experienced traders too.

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1% or less is ideal.
2% doesnt sound like alot, but it is.
5% and up is ridiculous

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If you risk 2% per trade it would take 35 consecutive losers with no winners to reduce your account by half.

This is (should be) very unlikely. Though its hard to trade back to the starting amount from 50%, its not impossible, and if you have to back out of trading at this point, that 50% of your account will pay some bills hopefully.

Even if the worst happened, and then happened again, so you had 70 consecutive losing trades and no winners, you would still have about a quarter of your account left. Bad, but not a wipe-out.

Time is an asset too. Key asset that trader have I’d say. With 0.25% risk per trade you literally will never lost, cuz probability of getting so many trades in a row is tiny, while spend a lot of time marking time because of being too conservative.
My advice is to reduce number of trades, i.e. place trades only on HQ signals with technical and fundamental confirmations

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I assume you’re talking of compounding down after each losing trade as 35 losses at 2% risk per trade is of course a 70% loss, just to point out the obvious.

It’s worth noting that compounding down after losses is also counterproductive and is setting the odds even further against you? By using this approach you’d need to achieve a higher percentage gain of your current balance in order to make back your losses? For example, if you lost 20% over 10 trades when risking 2% per trade and compounded down your balance/risk after each loss, you’d need to make back c.30% of your remaining 80% balance to reach your initial 100% balance prior to the losses taking place (hence you’d need to ‘win’ more than 10 trades to make up for the initial 10 losses) - easier described with a worked example, but for those that understand compounding and percentages it’s not to challenging to understand.

By not compounding down, and only compounding up when you reach a new balance watermark, your losses will always be recovered by the same number of winning trades.

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As usual advice, never find something new. But can be supportive for the beginner traders.

What do you trade?

Who is your broker?