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Maximum risk percentage

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Potomac, MD
Trading Experience: Intermediate
Platform: ToS, NT
Broker/Data: TD Ameritrade, IB
Favorite Futures: QM/CL
reno57540's Avatar
Posts: 161 since Oct 2012
Thanks: 120 given, 213 received

Maximum risk percentage

I have been trading a method that is giving reasonable returns and I am currently considering increasing my position size.

I have about $65k in risk capital. Even if I lost all of it, it would not affect my life in a dramatic way financially.

However, I have been abiding to the 2% loss per day rule, and since I am trading CL with a maximum loss of $1k per contract, it means I am never trading more than 1 CL contract at a time.

The problem is that it will take me years to be able to increase my position substantially to really make a relevant living at this job.

For that reason I am seriously considering increasing my risk per day to 4%, and trade 1 CL contract per $25k equity instead of $50k.

Things to consider:

- My maximum stop is rarely hit, as I always tighten it very quickly via a trail system. Most of my losses are usually around $500-$750 per contract, so even with a 4% max risk, my losses will rarely be more than 2-3%.

- My target is the same as my max loss, $1K per contract, but for the same reason as I rarely take a full loss, I also seldom take a full win. In general my risk/reward is about 1/1. This also means that I rarely have a very long stretch of losers.

- I take no more than 1 trade per day (some days I don't even get an entry), so not only would this be my max loss per trade, but it would also be the max loss per day.

I would be interested to hear people's thoughts, thanks for reading.

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