Why you should trade 1-2% of your account on a trade!
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Thread: Why you should trade 1-2% of your account on a trade!

  1. #1
    Hi Everyone,

    One thing I dislike is visiting traders get rid of money because unfortunately it does not grow on trees.

    I saved this picture of a trader I use to look around approximately 4-5 months back to understand that trading 1-2percent on guide trades is critical to survive (I trade large sizes on risk events such as ecb minutes because the volatility is very direct/quick and predictable).

    Please use this picture below to be aware that the purpose of forex is to last forever and not in the brief term.

    I'd want to know your views on the way you handle risk to last for the long run.

    Please take this thread quite seriously because blowing your account could result in a 9-5!!!

    Thank you.

  2. #2
    Quote Originally Posted by ;
    2 percent (or whatever the value) risk% is subjective. From curiosity, how can you guys calculate this? Example: Balance = 1,000 Leverage 1:300 EURUSD price = 1.195 Spread = 10point Stoploss = 200point Commission perroundtrip = 4/standard lot Trade BUY. So how much would be that the lotsize, if we risk 2 percent?
    Risk for me is straightforward.

    #20k trading account means that the most I would enable a loss to run for is 200 to 400 pound. The lot size is dependant on how good the entrance is on a manual transaction.

  3. #3
    Quote Originally Posted by ;
    I prefer 0.1percent to 0.2 percent. quote
    I'd imagine you have a very large account then or you're very risk aware.

    What risk level did you initially start with if you 1st started?

  4. #4
    My broker has a required margin, which ranges from 2%-10% depending on the pair. That means I must have cash in reserve to place a transaction. For example, 1 lot of EURUSD might require $2400 to be put aside in order to earn $10 per pip.

    Now you are saying to only use 1-2% of that? $24-$48? LOL. Funny.

    I add a set stop loss to the required margin and then divide my account balance by that requirement to learn how many lots I can trade. So, if I use a stop loss of 40 pips, then I must put aside $2800 for each lot. If I have $20,000 in my account, then I can trade a maximum of 7.14 lots (always round down). I fix my lot maximum in the end of each trade according to the shift in my account size, profit or loss.

    I trade like this for two reasons. One, I constructed a fantastic system. Two, the cash is available for trading, not saving. If you are basically doing demo on a live account, then sure, don't risk any money. The sole reason I can think of for risking pennies is that you place hundreds of transactions simultaneously and don't have a large enough account to risk more. Personally, I believe this is where this thought came from, Wall Street, where they had been placing numerous transactions all day , and somehow somebody converted that egy to incorporate a retail trader, who's probably trading a single pair at a time with a single entrance held before exit. So, kinda dumb, but that is my opinion.

    I would need to disagree with your theory. Losing more slowly still means you are losing. You shouldn't risk money until you understand how to win. All the Best.

  5. #5
    Quote Originally Posted by ;
    My broker has a necessary margin, which ranges from 2%-10% based on the pair. That means I must get money in reserve to place a transaction. For example, 1 lot of EURUSD may require $2400 to be set aside in order to earn $10 per pip. Now you are saying to just use 1-2% of that? $24-$48? LOL. Funny.
    Lol dont over complie it.

    For example when you've got a $10,000 dollar account the most you should be happy to lose on a transaction would be $100-$200 to make sure you endure for the long haul. I does not actually reflect margins etc or spreads although spreads might eat in the risk.

  6. #6
    Quote Originally Posted by ;
    quote Lol dont over complie it. For instance if you have a $10,000 dollar account the most you should be willing to lose on a transaction is $100-$200 to make certain to endure for the long haul. I does not really reflect margins or spreads although spreads may eat into the risk.
    The most I'd be willing to lose is my baldness, not a proportion of my account. My stop loss is naturally multiplied by the number of lots that I use. You have basically divided my situation by 2, so I'd have the ability to place 3.57 lots having a 40 pip stop loss. My approved reduction is $1428, even though it is very unlikely I'd still be in the market when my stop is struck because that is not how my trading platform works. It is just a stop loss value that is astrophic. Since I commerce, not bet I think. However, that is me. My company plan centers about compounding lot sizes, number of pairs, and number of accounts. So, I compound. Nonetheless, you need to understand how to trade. In case you have a very long haul issue, you should fix it before risking any money. One of the best ways to fix it is to journal your experiences, figure out what is missing, apply the lost bits, and examine again. If your attention is on losing, you will probably lose. Since I built it like that my egy works for me. When it doesn't fit your egy. Trade the same way, lol. My way is an alternate view of your own theory. All the Best.

  7. #7
    For my personal trading I've a'reasonable' line of charge, from a former employer. I plan for approx 60% account increase per annum, approximately 1% a week. I risk circa 0.05% - 0.1% each trade, worst drawdown this season has been 0.75%, I'm entirely automated, never hold trades instantly, and have a daily circuit breaker of 0.5%, If that's hit then all places automatically shut.

    As for risk when I first began trading, hmm, first trades were buy and hold stocks 20 years ago. And for a very long time I would just swing trade FX.

    Quote Originally Posted by ;
    quote I would imagine you have a very large account then or you are very risk conscious. What risk level did you originally start using when you 1st started?

  8. #8
    Quote Originally Posted by ;
    quote The maximum I'd be eager to shed is my stop loss, not a percentage of my account. My stop loss is naturally multiplied by the amount of lots that I use. You have basically divided my scenario by 2, so I'd have the ability to place 3.57 lots having a 40 pip stop loss. My approved loss is 1428, though it is very unlikely I'd still be in the market when my stop is hit because that isn't how my trading platform functions. It's nothing but a astrophic stop loss worth. I think differently since I trade, not gamble. However, that's me. My business plan...
    That was a fab insight what you just provided in terms of how you manage your risk. The picture I put up within this thread reveals somebody going bonkers on a live account and I am certain that they've blown that account since eur/usd prevailed since then.

    I truly expect retail traders consider risk seriously since that is what usually the downfall its not even just based on shedding.

  9. #9
    I see two versions of stop loss, one tied to account size, and one tied to market price. In nature, I suppose both could be factoring in market price and indiing a losing trade. I would rather use the market to guide the stop, as opposed to just how much money I am willing to lose. I would rather take what the market gives, rather than attempt to restrain it according to my risk. It is simply a difference of opinion. The key is that in the two cases, a reduction is stopped at some point and not allowed to cripple your account.

  10. #10
    Quote Originally Posted by ;
    For my private trading I've a'reasonable' line of charge, from a previous employer. I plan for approx 60% account growth per annum, roughly 1% a week. I risk circa 0.05% - 0.1% each trade, worst drawdown this season has been 0.75%, I am fully automated, never hold trades instantly, and also have a daily circuit breaker of 0.5%, If that's hit then all places automatically close. In terms of risk when I first began trading, hmm, first trades were buy and maintain stocks 20 years back. And for a long time I'd only swing trade FX. quote
    The holding trades instantly is very subjective. By way of instance I went long via swing trade gbp/nzd and hedged going long on gbp/aud only if rbnz came out bullish or something awful happened in either state. I banked over 300 pips via holding through the night.

    Are you really not holding trades over night only in the event of some form flash accident?

    60% per annum is a fab return considering the line of risk you're trading with. If you're pulling off that then your a super expert.

    The single time that I go in with heavy risk is when trading deals or interest rate minutes in addition to post central bank press conferences. By way of instance I exchanged eur/nok interest rate minutes understanding they would be hawkish since cpi had been above their target rate for this month. EUR/NOK gained strength rapidly and that I profited big.

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