Hi, I’m curious does 1% risk management means that with each new trade I would need to recalculate to 1% risk or it’s fixed for example if you had $1000 it would mean you can risk $10 for 100 times?
The percentage of risk on a trade is not carved in stone and in fact is not even the main criterion here. It is only an approximation of what is a suitable maximum potential loss size in order to protect your capital in the event of a string of losses. For example, if you have a small account and you risk 20% of capital on a single trade then 3 consecutive losses will lose over half your equity and leave your account with a balance too small to be able to trade with effectively.
Using a 1-2% risk parameter is a good starting point in setting your stoploss level but you should always then fine tune it with respect to the earlier price movements. e.g. move it beyond a recent high/low or S/R level or MA etc. Your risk will then be <> 1% and rarely precisely 1%. If the nearest stoploss level based on price history is too far away to maintain a sensible risk level then ignore the trade.
These percentages are only guidelines, price movements provide the actual key levels to take notice of.
Novice traders should remember that trading is a work for professional. If you want to stay here for long, you have to develop a mind set of a professional trader. You can’t treat it as gambling. You have to give time in learning.
There is no limit to how much you can risk per trade. It is up to you to decide as per your affordability.
1% risk management is for noobs who won’t want to risk money. But that’s for a few trades. Eventually, you’ll have to go ahead with the risk percentage to make profits.
Increasing the 1% risk is not the only way to increase profits.
For example, a winning trade can be pyramided and the stops of prior trades advanced so that risk never increases but the potential return is multiplied with each pyramid. Its a tricky tactic but powerful: probably best to demo it before putting in real money.
You can do it both ways. But, probably the second one makes more sense.
Maybe you find this approach described in the lines below useful.
Risking 1% on each, calculated at the started point:
You start with $1000 and your maximum target loss of the year is 20% ($200). Then you may risk $10 on each trade till you lose $200.
We must understand that when we are trading with lower amount of risks we will remain as safe traders.
So you’re saying you’ll be sticking with 1% risk management strategy for 100 trades? Seriously? Why would you want to do that? I believe if you wanna achieve success, you need to alter the RRR after intervals.