Risking how much Capital?

[king156]

Hi all just a quick question hoping someone can clear up my confusion

SO I heard to really only risk 1% of your capital in a single trade. Now when spread betting I realise there is a margin does this mean make the margin be 1% of your capital or the pounds per point? Sorry if it sounds confusing.

So if I open an account with £1k then I should use no more than £10 per point?

Thanks for any help Alex

 

[barjon]

Hi all just a quick question hoping someone can clear up my confusion

SO I heard to really only risk 1% of your capital in a single trade. Now when spread betting I realise there is a margin does this mean make the margin be 1% of your capital or the pounds per point? Sorry if it sounds confusing.

So if I open an account with £1k then I should use no more than £10 per point?

Thanks for any help Alex

no, risk means the amount you stand to lose.

so if you buy at 100 and have stoploss at 90 you lose 10 points if it goes down to there.

You've risked 10points @ £1per point = £10 = 1% of your £1000 capital

 

[tomorton]

No.

Assuming this is not a wind-up, 1% is the loss you would accept when you accept the trade is going in the wrong direction and you either close it manually or price hits your pre-set stop-loss.

However, you're dead right to try to get this straight in your own mind but FFS absolutely do not place any spread bets yet until you are more sure of the process. Then paper trade with a demo SB account until you're competent and consistent at entries and exits.

1% on a £1k account will give you only a tiny clearance between entry and stop-loss. Consider increasing capital or accepting a larger % risk.

 

[king156]

No.

Assuming this is not a wind-up, 1% is the loss you would accept when you accept the trade is going in the wrong direction and you either close it manually or price hits your pre-set stop-loss.

However, you're dead right to try to get this straight in your own mind but FFS absolutely do not place any spread bets yet until you are more sure of the process. Then paper trade with a demo SB account until you're competent and consistent at entries and exits.

1% on a £1k account will give you only a tiny clearance between entry and stop-loss. Consider increasing capital or accepting a larger % risk.

no its not a wind up. And okay I opened a demo account with IG got a long way to go yet before I open a real account besides im only 17 so I wont open one until I turn 18. So to clear up if I had £1k how much would you estimate to put on in pounds per point? I really don't get the risk management??

 

[king156]

no, risk means the amount you stand to lose.

so if you buy at 100 and have stoploss at 90 you lose 10 points if it goes down to there.

You've risked 10points @ £1per point = £10 = 1% of your £1000 capital

Thanks for that and where would you put a limit on this? 10 points above the opening?

 

[barjon]

Thanks for that and where would you put a limit on this? 10 points above the opening?

well, this is going to get complicated because it depends. If you get 50% of your trades "right" (ie: getting to your limit) then you are going to break even overall. You can work out what the overall would be with different success rates.

Don't forget you've also got the bid/offer spread to deal with. If you see price at 100 on the chart it is likely to be the mid price between the buying price and the selling price.

To answer the question you asked tomo, if he's not answering while I'm writing this, you can stake an amount of a size where you will lose £10 (say) if your stop loss is hit. If that stoploss is 10 points away you can stake £1, if it is 20 points away you can only stake 50p (50p x 20 = £10).

 

[king156]

Thanks everyone for the help got a long way to learn yet. With many more hours on the demo? Can anyone say is it realistic with the ig demo? Im mainly doing currency pairs any thoughts....

 

[gle101]

Thanks everyone for the help got a long way to learn yet. With many more hours on the demo? Can anyone say is it realistic with the ig demo? Im mainly doing currency pairs any thoughts....

If I were you I would look for a broker that offer a lower entry level than a £1 stake size. I would also settle for a 0.50% risk per trade (included stop loss), this as you have some years ahead of you grasping how you and the markets work together.

 

[Solas0077]

If I were you I would look for a broker that offer a lower entry level than a £1 stake size. I would also settle for a 0.50% risk per trade (included stop loss), this as you have some years ahead of you grasping how you and the markets work together.

Good suggestion going to 0.5%. I often do 0.25%. I never went bust in 10 years not even during financial bust. I average down at strong support for maximum of 0.5%.

I think 1% may be too much nowadays.

 

[mike.]

Can anyone say is it realistic with the ig demo? Im mainly doing currency pairs any thoughts....

The demo is more or less the same as the live platform, so its a good way to practice entry/exit and managing a trade, only trade £1 per point on the demo, otherwise it will give you a false impression of potential winnings. for example, its quite easy to make 5k in a few trades on demo trading at £100 per point, not so easy in a live account when all your emotions kick in.

Read plenty and practice, then hit the ground running when your 18, IG wont know what the hell hit them good luck and keep asking questions here to help your journey.

 

[king156]

The demo is more or less the same as the live platform, so its a good way to practice entry/exit and managing a trade, only trade £1 per point on the demo, otherwise it will give you a false impression of potential winnings. for example, its quite easy to make 5k in a few trades on demo trading at £100 per point, not so easy in a live account when all your emotions kick in.

Read plenty and practice, then hit the ground running when your 18, IG wont know what the hell hit them good luck and keep asking questions here to help your journey.

haha thanks guys. I ordered spread betting the forex markets by david joes and a few other sb books. Okay that's great will stick to £1 per point and I started with 1k capitql in the demo as this would be a realistic price for me in the future. Hahah thanks again