## What is you per trade risk as a % of your total assets

• ### >10%

• Total voters
152

#### Anonymous

##### Active member
If a trader has a number of accounts that make up his total portfolio, how is he going to know for sure how much is his per trade risk?

If in one account he risks 5% of capital in that account using one strategy, but about 50% of another account using arb, it's not quite easy to estimate the per trade risk.

Moderator
Almost all the traders I know only have one account so this is easy to determine in my view.

Paul

#### Anonymous

##### Active member
Assuming an individual trader, not an institution, has \$100 as his capital, after allowing for all his other requirements, living expenses, insurance whatsoever.

If he wants to take a risk with that \$100 by trading the markets, and he has to decide with which broker he should put that \$100, would he put all that \$100 with one broker alone?

#### spunkyblonde

##### Member
Anonymous said:
If a trader has a number of accounts that make up his total portfolio, how is he going to know for sure how much is his per trade risk?

If in one account he risks 5% of capital in that account using one strategy, but about 50% of another account using arb, it's not quite easy to estimate the per trade risk.
yes 1 to 2 percent seems the go

##### Well-known member
Anonymous said:
If a trader has a number of accounts that make up his total portfolio, how is he going to know for sure how much is his per trade risk?

If in one account he risks 5% of capital in that account using one strategy, but about 50% of another account using arb, it's not quite easy to estimate the per trade risk.
It's an easy calculation. Just take the actual EUR/GBP/USD risk per trade and divide it by the total value of all your accounts.

You say you're risking 50% on the arb side, but is half your account actually at risk of loss? Or is that how much of the account is used for margin, etc.

#### Directional

##### Well-known member
by risk of loss, do you mean the difference between where you enter and where your stop would be?

##### Well-known member
Arbitrageur said:
by risk of loss, do you mean the difference between where you enter and where your stop would be?
It doesn't have to be specifically stop-related. In any given position one should have an idea of the loss that could/would be taken if the market were to go against the position in question. A stop can provide that. In other cases it could just be a funtion of the position, like the defined maximum loss of a long option position, or the downside potential of a spread trade.

I suppose it could be thought of in terms of Value-at-Risk (VaR), but most traders probably aren't going to get too deep in to that concept.

Moderator
If he wants to take a risk with that \$100 by trading the markets, and he has to decide with which broker he should put that \$100, would he put all that \$100 with one broker alone?
If you only had \$100 to trade with (note I didnt say invest) then you would be unlikely to be able to put it with more than one broker and in most cases you wouldnt be able to trade with that amount as most brokers require substantially more. Whatever you think most people use one brokerage to trade with. Some may use more than one account but the majority simply dont.

Paul

#### Salty Gibbon

##### Member
My approach is to have a maximum of 3 trades open at any one time with a maximum risk per trade w.r.t total capital of 0.3333% max.

Therefore my total open positions will not have a risk greater than 1% of my total capital.

I feel comfortable with this.

Others may feel it is too conservative but each to his own.

#### Satori

##### Member
I use a stop-based risk factor, so that if I get stopped out I lose a fixed percentage of my portfolio.

The most I'll risk on a long-term trade is 2% of portfolio value and the most I'll risk on a short-term trade (which, for me, is anything less than a 3-day anticipated hold) is 1%.

But for I'll only lead with half that and add the rest if the trade goes in my favour, then - if things really go in my favour - I'll lock some profits in and compound.

The important thing for me is to know the maximum I can lose on one sequence of trading a particular instrument.

#### Anonymous

##### Active member
I meant that metaphorically, would anyone put a 100% of that risk capital with any one broker alone.

If he puts that 100% with one broker, and that broker closes shop, or gets into ongoing litigation problems, or there is a personality conflict between the broker and the trader, and other scenarios. Not that such things will happen, but if a trader knows what is diversify surely he would know what is don't put all your baskets on one egg?