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How much of your account do you risk per trade, on average?


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How much of your account do you risk per trade, on average?

  #41 (permalink)
 Miesto 
Monte Carlo, Monaco
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jamrock View Post
in this example he is risking 100% of his daily loss limit! do you see that 100 % of 1,200 he is willing to risk not 2 % of his daily loss limit!

The $1,200 is his daily loss limit. He does not risk that on one trade. He trades 1 contract for every $300 (1/4 of his daily loss limit). The first trade (ES) with 4 lots loses 6 ticks / 1.5 pt for a total of $300 (4 x $75).

Because he lost 1/4 of his daily loss limit he scales down to 3 contracts and so on till 1 contract. As soon as his loss equals -$600 (trade 12) he goes up 1 contract to trade 2 contracts (1 contract for every $300 he still has). It's just about scaling down & up.

@syswizard: The number of contracts traded is on the right side above the zero line, it's not going negative.

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  #42 (permalink)
GlobalTrader
Long Beach , LA
 
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Bionan View Post
Sounds interesting. I have not seen that before. My problem would be that by the time I got to 5% the market would change.

If trading short time periods that does present a problem, most of my trading is done from the daily and weekly zones which are then watched on a lower time frame. I don't like trading 1min or 3 min charts. Too much noise for me personally. The other thing I',m currently trading from New Zealand and once I drop to smaller time frames I have latency issues, so better to use a higher period then I feel I'm not trading against algoes , and others who have better data than myself. It's just the way I have found it to work for me.

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  #43 (permalink)
 Bionan 
Palm Harbor, Florida/USA
 
Experience: Intermediate
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GlobalTrader View Post
Futurestrader71. Using a tester small trade was something I did but once I saw FT doing it also I adopted it more.

Be interested to see your results once coded.

I have done this before, but it is certainly something that would require ongoing optimization, IMHO. I found on backtests that there was definitely a number of max consecutive losses which produced optimum results. Too many losses and you are throwing "good money after bad", and too few and your system stops trading before it would have gotten out of the hole.

I think it is important to consider how frequently your system generates signals, and when these signals occur in relation to the market cycle of your instrument.

Rick

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  #44 (permalink)
 jamrock 
tampa florida
 
Posts: 63 since Sep 2020


Mich62 View Post
The $1,200 is his daily loss limit. He does not risk that on one trade. He trades 1 contract for every $300 (1/4 of his daily loss limit). The first trade (ES) with 4 lots loses 6 ticks / 1.5 pt for a total of $300 (4 x $75).

Because he lost 1/4 of his daily loss limit he scales down to 3 contracts and so on till 1 contract. As soon as his loss equals -$600 (trade 12) he goes up 1 contract to trade 2 contracts (1 contract for every $300 he still has). It's just about scaling down & up.

@syswizard: The number of contracts traded is on the right side above the zero line, it's not going negative.

if someone has a daily loss limit they are willing to lose and risk that much for the day! not sure how it can be put any differently what percentagew was the max drawdown of the loss limit? and this max drawdown would have continued lower if the mkt had continued lower. it is obvious saying 2 % of an account for risk is silly on all levels.

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  #45 (permalink)
tradefreely
Denver Colorado
 
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Big Mike View Post
This poll idea was suggested by @planetkill

How much of your account do you risk per trade, on average?

I listed percentages because it is more useful than dollar amounts for comparison between members. However, I doubt many people know their % risk per trade (unfortunately). For those traders, dollar amounts would be better.

So we may repeat this poll in the future for that reason.



Mike

There should be a follow up poll. How long have you been profitable?

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  #46 (permalink)
SunTrader
Boca Raton, FL
 
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jamrock View Post
I am back to throw a little common sense into this thread since it appears to me over and over again that more than 90 % of all losing traders to do the same thing over and over again and expect different results! i will use a broad example with broad estimates of the nasdaq index for my example but risking 1 to 2 % because old books say this is correct is about as intelligent in my opinion as eating mercury for your health!

1. Books lie
2. people lie
3. look at your own trading and say hmm what would have happened if i had risked 5 % or 10 %
4. brokers and exchagnes who charge you on transactions love the 1 to 2 % rule

1) Which books?
2) Which people?
3) do that and account goes poof almost always. Common sense a beginner should even know.
4) brokers and exchanges love traders that ummmm ... continue trading for a looong time.
5) price goes where it goes and doesn't care about price targets (percentage-wise or by any other method)
6) using 2% allows one to have "some" losers. LOL not fifty.
&) see 5

the rest TL DR

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  #47 (permalink)
 
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 Tymbeline 
Leeds UK
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0.3% (for most of my trades).

Sometimes 0.5% for different type of entries which collectively have a higher win-rate and PF (but these are much rarer).

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  #48 (permalink)
Vroon5
Brussels+Belgium
 
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Around 0.4%, i'd say. max i go up till 0.6%.

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  #49 (permalink)
 Fryer 
Lebanon, PA USA
 
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For me its 0.5% to 0.75%.

IMO 5-10% or more is a surefire way to blow up. I speak from my own experiences and refunding several accounts. 2%-3% max daily drawdown. I can't say I've never broken these rules, but it helps prevent going on tilt and revenge trading if I adhere to them.

Sent using the NexusFi mobile app

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  #50 (permalink)
 
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 Tiffsgreta 
Kanab utah/usa
 
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I trade about 12% of my account, for example. I trade option spreads. I have a small account $5400, and I'll buy a spread that costs me $700. So I know I only lose what I have invested - I prefer the low nightmare futures effect. Anybody else do this?

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Last Updated on November 10, 2020


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