Hello everyone! I copied this thread from another forum cause I think is very interesting to discuss.
a) Less than 1%
f) more than 10%
g) I am still demo trading
I myself risk no more than 10%: enough to make a decent profit but not that much that will leave me naked.
The answers you receive on this post are fairly meaningless without the context of the performance of each trader.
As an example, if I traded 90% success, with a minimum risk:reward of 5, then I would certainly be trading a large portion of my account, perhaps 20% or more, and concievably this would be good money management.
However if my performance was 50% for the above, then I would be foolish to be trading 20%.
You cannot base your risk on anything other than your own performance and any newbies to this thread should go and get educated in this critical area before thinking they can do what everyone else does!
I prefer to trade in a very relaxed way, choose my direction in the morning and go for some big points with not much hassle in between. As a result I get a 50:50 win/loss however my risk:reward is large. I am a trend trader, so on trade entry I have no idea what my risk:reward is, I can only control my risk and run my reward. My trade history tells me what my average risk:reward is, but this is after the event not before.
The strategy I use doesn’t even lend itself to defining a % risk as I hedge, so for me this question is not answerable. I base my contract size on historic drawdown and correlate that with market volatility and possible big news expected.
So, If you consider each trade individually I could actually be trading a max of 1 lot for each 10k of my account, but in actual fact my risk is closer to 1/5th of that due to correlation. Complex to figure out,but easy and profitable to trade!
Again, I guess I have complicated this – just want to point out another popular miss-conception, you don’t need to know the risk reward when you run your trades for as much as you can – you just need to build up your stats and monitor your performance.
I think so i shuld go for option “D”, because 5% risk is enough for every trader and if you are capable to take risk more thatn 5% ,so i suggest you that still don’t take risk more that 5%. and also it is denpend on risk reward ratio, if you are looking for more reward so you have to enter in riasky trade, but always your risk should be 1/3rd of your reward.
What’s risk and how does it apply here. Risk is not the amount you are using to buy or sell. It’s the amount you’re put on your sell stop.
Trade well and prosper,
I believe you need to come up with a strategy that exploits a VALID edge, and this edge needs to be historically tested under different market conditions. It also needs to minimize draw down during markets which are not optimal for its edge.
As an example, a simple moving average in a trending market with a mix of stochastic indicators could easily give you 20 winners in a row. Nobody in their right mind would trade that though.
Also nobody knows what potentially the market will do in the future, so, unless you are a big risk taker, in which case you won’t be trading for long, then even with the best strategy in the world you would still need to be cautious. The only time I would consider going above 20% would be if I had a crystal ball.
So in summary, the least % the better, the absolute max i ever do is 10%, but that is only because my strategy has a very quick recovery from drawdown so I can tolerate 10% losses (which are very rare)