Hotch
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Maybe if you actually derived it you'd understand it better.
Maybe if you actually derived it you'd understand it better.
Thanks to the members who participated - so out of 9 most popular choice is 2% or 5%
So bed sit .... when you moving into a studio???![]()
When you exceed the level of risk of your performance record, that is too much.
2% is a good solid safe base level to start from.
Really, it should be based on a number of factors:
Drawdown.
Sharpe ratio.
Strike rate.
Max consecutive winners.
Max consecutive losers.
Average win / loss ratio.
For me that is the only decent way to properly assess risk based on non curve fitted backtest
and walk forward testing of a decent sample size (500-1000, 300 as bare minimum).
Once you know the above, that doesn't mean you have a concrete risk level for your methodology
going forwards, all it means is you have a statistically valid base to go forwards based on past results.
It may transpire that 3%, 1% or even 0.5% would be a better risk per trade for you.
I still voted 2% as its the safest starting point.
Thanks LV.
All that calculations require some serious analysis and too much thinking - it gives me headache.
I'll try to stick to 2% - that's the most popular choice among 10 kind members who participated.
True, arguable whether or not its essential anyway.
As JRP said - drawdown is probably the most important anyway.
There are 2 members who risk 10% of their accounts per single trade.
It would be interesting to hear about their trading experience - if they manage to keep emotions under control when the loss comes close to 10% of the account. Also I would assume they haven’t suffered 10 losses in a row - is this assumption wrong - maybe they kept opening new accounts after blowing up?
PS 10% or more I used to risk with my demo account - once I made 62% overnight.
And when you say risk do you mean risk as in position size or how much you put down as a margin? On a £1,000 forex account you have £100k worth of positions you can take out, so a £1,000 position (in theory risking all of your capital) would cost just £10 to set up.
.
Imagine if it had been real money and you'd risked your whole account. This is the stuff of my dreams, never happens to people though
I once did a 300% return over a weekend on fxtrader.investopedia.com but I risked a lot. I had grown my account, conservatively, from the fictional $100k to $400k and I went to $1.6 million when the markets reopened. Lost much of it back though, trying to get a 300% return on capital invested again.
I can't imagine that JTD.
Good luck is very important, but not enough to succeed in trading. The market can be brutal sometimes. Preservation of capital is the most important IMO.
Hi J The Trader.
Maybe it's the easiest way if I show you my understanding of the risk by explaining one of the trades I took today:
1) observing hourly eu chart I could see rejection of 23.6% Fibonacci level (there was an inverted hammer with a long wick going through the level and my idea for an entry was at the close of the next bearish candle after the inverted hammer)
2) at that point (closure of the second candle) I knew exactly where I was going to put the stop (above the inverted hammer high) and where my 1st and 2nd target were.
Distance from my entry to the stop was 66 pips. At that time I was ready to risk losing 66 pips x stake.
Let's say I have £50,000 on my spread betting account and I feel comfortable with risking 2% of my account on this trade. 2% is £1,000 and the distance is 66 pips. I do some basic calculations and come to the size of my stake:
£1,000 / 66 = £15.15
bedsit said:So if I'm unlucky and the price hits the stop I lose £1000 or 2% of my account