Pazienza
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It varies so much, I don't think there's a right answer. The cliché I suppose is no more than 1% - 3% per trade, and this is probably good advice for most people. However, I think more can be fine for certain traders.
Just speaking personally, certainly 3% would make me nervous, and as for 5 or 10, there's no way I'd be comfortable.
But everyone's different.
Tantalos
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As long as you have enough margin, I think it should be ok
It takes far too long to top up account
Many thanks
Fredo
It takes far too long to top up account
Many thanks
Fredo
Do you use stops, or wait for a margin call?
What is your success rate if you don't mind the question?
Tantalos
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YouAreNotFree
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Min 1% max 2% is comfortable for me.
Yeah - I see the point.
Same for me. Only if I lose control completely, I go for 5% or more.
Whatever drawdown you can mentally cope with and trade through the other side to.
When you're in a large drawdown and it surprises to the downside, you'll always wish you had traded less size in getting there, so err on the side of caution.
Masquerade
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I try to never risk more than 100%. I'm not sure quite how you define "risk" because "risk" and where you place a stop are different concepts.
Hotch
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qft
And what is the probability of winning or losing this 5%? Is it, "If I lose, I lose 5% with certainty"?
Ideally you want an entire probability distribution, with details on expected return , value at risk, skew and kurtosis. Unfortunately, a method which uses stops takes away this versatility.
Hotch
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What about when you're hitting new highs, surely then you wish you'd been risking more? Guess if you follow that it depends about which hurts more, not my type of thing though.
options-george
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I try to estimate the edge I have for each strategy based on historical and live trading, and then, given that level of edge and likely pay-off for the winner (e.g. if RR is 1.4 then the pay-off is 1.4), use the Kelly principle to determine the maximum % of my bankroll that I should risk for each trade belonging to the strategy. Though I don't use full Kelly, instead I use 1/4 Kelly to be the max risk per trade.
When I start with a strategy I risk a nominal $ amount per trade, then after testing I move to 0.5% then to 1%, and once I start feeling comfortable with the strategy and it consistently profitable I move it up to a max of 2.5% (which is often still less than 1/4 Kelly).
FYI I asked some similar questions a while back - here's the thread:
http://www.trade2win.com/boards/planning-risk-money-management/113254-1-risk-per-trade.html
I try to trade for a living and my trading BR is not supplemented by any other income - i.e. I have to trade conservatively.
LiveTradingZone
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1-2.5% max loss per trading day and you will never blow an account.....and if you do, you should never trade again lol.
What trader doesn't wish they had more on when hitting new highs?? You can't trade without a stake though!
What is your "thing"?
Hotch
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Maths.
