Why only 1% Capital Risk when trading

This is a discussion on Why only 1% Capital Risk when trading within the Psychology, Risk & Money Management forums, part of the Methods category; Your % risk should be somewhat based on your maximum expected number of losing trades/drawdown and the frequency of the ...

Reply
 
LinkBack Thread Tools Search this Thread
Old Aug 30, 2017, 9:52pm   #129
Joined May 2010
Your % risk should be somewhat based on your maximum expected number of losing trades/drawdown and the frequency of the trades too.

So if you are a high frequency scalper who regularly takes 7-8 losing trades in an hour , 1% is probably too aggressive . Conversely a position trader taking one trade a month and who maybe expects a maximum of 4-5 losses before a drawdown ends , 3-4% seems more appropriate . All depends on what you could tolerate as your max dd

There are probably some very good formulas out there to work out this kind of thing too
Chartsy is offline   Reply With Quote
Old Aug 30, 2017, 10:09pm   #130
Joined Aug 2017
Quote:
Originally Posted by Quantt View Post
Unfortunately, all those numbers are arbitrary... you need to apply something like the Kelly criterion (not perfect, but a good start) on your past trades to determine the risk level for your trading system...
I agree, I work with 2% as in my plan. It has to be a truly exceptional circumstance to move from this. Last week when Provident took a dive was the only time in many months that I made a decision to increase risk threshold. And not by much to be honest. If news feed had not included top guy walking out I would of used 2%.
Stormy42 is offline   Reply With Quote
Reply

Thread Tools Search this Thread
Search this Thread:

Advanced Search

Similar Threads
Thread Thread Starter Forum Replies Last Post
Software for identifying trades based on a custom risk-reward/risk capital kkarank Trading Software 39 Mar 3, 2011 11:04am
Capital at Risk robster970 First Steps 5 Jan 6, 2009 5:39pm
var and risk capital chitrader Commodities & Money Markets 2 Jul 18, 2008 3:35pm
percentage of capital at risk expensif Psychology, Risk & Money Management 24 Sep 30, 2006 2:14pm

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)