Ratio between account size and bet size

[cshieldsx]

Hi all,

Just wondering what bet size (per point) everyone believes is an acceptable level to use in comparison with their total account size. And when I say account size I total level of funds that could be lost before you would exit the markets and stop trading due to loss pf all your capital.

I still only paper trade, but I'm trying to get a rough idea before I start for real.

Im thinking for £2000 capital, trading on mainly ftse 100 equities, £1 per point is ok ?

1) What do you think of that level ?
2) What do you bet per point (either as a percentage of your total funds before ruin, or just give figures of each)

Thanks

 

[TheBramble]

Working on a 1% max risk per trade and a starting capital of £2K you're obviously looking to be right, or be proved right, within £20 of entry. Depending on your stop size and R:R it’s looking tight even at £1/pt.

Especially with an SB, which by all accounts (no recent experience myself) will think nothing of spiking through your stops.

 

[cshieldsx]

What is R:R ?

 

[TheBramble]

Risk:Reward. If you're stop is 20 points away and your target is 40, or 60 points, that would be a 1:2 or 1:3 R:R respectively (although most seems to quote the ratio the wrong way round for some reason).

You need to establish your own R:R criteria for taking a trade. Depends on the instrument and the platform you're using. I'm far more relaxed in some instruments than others in that I will go into trades with a 1:3 on some instruments and in some market conditions (choppy for instance), but at most others at other times I'll be looking for considerably higher ratios.

The question you need to ask yourself is how confident you are in establishing your likely target(s) both in price level and time. If you aren't doing that or can't do that reasonably consistently then it makes it a far riskier endeavour. Quite literally.

 

[cshieldsx]

what type of trades do you do ? eg. day/swing/position