equity management puzzle-ment...help?

[whitney Griggs Ralei]

I have been trading for two years but feeling still a beginner... My quesitons may be basic but I am very hungry for answers. Maybe you can help. I am wanting to preserve my capital to stay in the game as long as I need to reach my end financial goals.

1. How do I determine how many trades I may lose before my account is blown out for example, starting with $2000 with a 3% risk, using 20 - 30 pip stop loss, with 2:1 ( or 3:1) ratio for win/loss, going for 30 - 60pip gains... trading with .1 lot size at 1:200 leverage? Is it around 60 trades? please explain how you are figuring this out. THat's the real answer-help I need.

2. What if I set a goal of going for 225 pips / mo. wanting to grow my account by x % each month...TBD... by increasing my lot size each month so that I am still only risking 3% of my account but aiming for a 20- 40 pip gain per trade with a few tested strategies - does this affect my risk goal of 3%... ? all conditions from #1 and #2 remain the same.

3. What is the difference between a 3-5% risk on my capital ( not too bad) but on all trades for a 1 day session - risking 3-5% IS BAD ?? Hmm?? I really don't understand this.

I do realize it is a personal issue of risk/loss tolerance but I am asking for common sense basic E. M. thinking here really...
Looking forward to your threads...hope my language isn't confusing

Thanks in advance.
Pipster

 

[Adamus]

Hi Pipster,

for (1) you need to run your trading system over some market data - as much as you can. The more data, the more reliable your results. These simulations will let you build up a picture of the kind of drawdowns and losses to expect.

To determine your risk level, you have to determine what you're exposed to, i.e. how big the worst losing trades are going to be. (see above).

Or you could guess. If you're going to guess, be conservative.

Does that help?