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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?

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  #1 (permalink)
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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.

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

Total votes: 1143
 


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Did you know your percentage risk per trade off the top of your head? Or did you have to calculate it? If you did calculate it, what method did you use?

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  #3 (permalink)
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I risk on each trade 1% of the account. I have often multiple trades running at the same time. If there is some correlations between trades I make sure that in correlated .market I risk in total 5% max.
I consider CL, GC, and ES as strongly correlated. Curencies are also correlated since they all refer to the dollar.
Cattle and hogs, offer me extra level of uncorrelation.

I compute the risk in my head , and I use the risk reward tool of sieeraChart. First I draw the risk reward drawing then I click on the qty of contracts to adjust the size until I see the risk getting closer to 1%, then I place the trade.



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I used to think trade risk in terms of account percentage. Over time, I have realized my monkey is calmer risking a certain dollar amount to open a position and I have made peace with that approach. I am either All In All Out or I add to winners. Either way, I make sure my risk doesn't increase beyond what I risk for the initial position.

I also feel, with futures, you don't have to necessarily keep the cash in the account to maintain a percentage risk. This is of course assuming you have an edge with a positive expectancy. I maintain enough to be able to lever up and carry positions overnight when needed and maintain all margin requirements with enough cushion. If I have to express my per-trade risk as a percentage of all money that I could allocate for trading, it is well under 1%.

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None of the above. Run a portfolio of positions not individual separate trades. How is this different? Imagine I buy the Feb-Apr spread, then buy the Jun-Aug spread, then sell the Dec-Jun spread. My position is -Dec +Feb -Apr +Aug, ie a portfolio not individual trades.

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  #6 (permalink)
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I put up to 5% in each trade.

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I mainly trade options, I keep fixed points in premium as my SL and trail it. Generally in terms of % value of the account it runs to 5-10%. But it is not "fixed" for every trade. I just make sure it doesn't go above my appetite for a particular possible loss on a trade. Only rule I follow is that if that limit is reached I won't carry that position and I will walk away from terminal.

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  #8 (permalink)
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LastDino View Post
I mainly trade options, I keep fixed points in premium as my SL and trail it. Generally in terms of % value of the account it runs to 5-10%. But it is not "fixed" for every trade. I just make sure it doesn't go above my appetite for a particular possible loss on a trade. Only rule I follow is that if that limit is reached I won't carry that position and I will walk away from terminal.

"Everybody has a plan until they get punched in the mouth."

Mike Tyson

IMHO 5-10% is a punch to the face ... at some point.

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  #9 (permalink)
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SunTrader View Post
"Everybody has a plan until they get punched in the mouth."

Mike Tyson

IMHO 5-10% is a punch to the face ... at some point.

It is, no doubt.
But then again, if you are scared of those fair punches, why box?

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  #10 (permalink)
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For futures day trading I try to risk $100 per contract but depends of volatility; I donít have in consideration the size of the account but if my mind is comfortable with it.


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  #11 (permalink)
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It all depends on the signal and what I'm trading. Using a one size fits all does not work when trading different instruments.

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Made a post about it in my journal

The general takeaway is I trade less than 1% per trade but as I reach new milestones, I earn the right to increase my size. It has incentivized me to hold onto winners longer (In my head, the more I make now, the quicker I can make more in the future) but also, it has helped me stay sane during some gnarly drawdowns.

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Big Mike View Post
This poll idea was suggested by @planetkill

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.



Mike

Does anyone else base risk on consecutive losses rather than percentage.

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Big Mike View Post
Did you know your percentage risk per trade off the top of your head? Or did you have to calculate it? If you did calculate it, what method did you use?

Mike

I know the % off the top of my head because I program it into the strategy. With Blackbird I use "Trade Fit". I tell Blackbird how much to risk on each trade per order. If a trade is one position, 1% risk. If two positions, 0.5% account risk per position. I can even tell the program how to distribute the risk, with more of the trade being allocated to the 1st profit target. Once I set the stop loss, the $ risk per trade is automatic. I can also know and adjust before I enter the trade what my R:R is. It's a wonderful benefit.

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2-3 % most of the time, and never more than 5%.

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tampa florida
 
 
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sometimes as high as 50 % and it depends on what I am doing in the mkts ans what kind of trade we are involved with and what the data is suggestion or showing.
THIS 1 size fits all mentality is what is killing most retail traders. how can everyone do the same thing and expect different results?

im serious. obviously if for every winner there is a loser then you must do something different than all the others and it starts with a radical
adjustment of how you view risk probability and the mkts.

if you have 100k to trade or invest i mean really you will risk 2k on a trade that is it? how can you ever make any money at all and how can your trade breathe i fyou are in and out in and out a loss. being on this site has been a wake up call as to why over and over so many retail guys just keep losing.

if we are all trying to learn how to beat each other at checkers and we follow the same methods what do you think will be the outcome.

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jamrock View Post
1) sometimes as high as 50 %
2) and it depends on what I am doing in the mkts
3) and what kind of trade we are involved with
4) and what the data is suggestion or showing.

And you are measuring all of this and it's quantified ?
Otherwise, you are a hopeless discretionary trader.
Good luck.

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  #18 (permalink)
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syswizard View Post
And you are measuring all of this and it's quantified ?
Otherwise, you are a hopeless discretionary trader.
Good luck.

discretionary traders are not on a hopeless path as you put it and every trade anyone makes is discretionary because at some point in time no matter how small
your data or your signal is biased so to think for a second that all data in the mkts has a quantifiable result and blindly following it is exactly what
happened to LTCM and many others along the way of using big data.

What i do is what I do and how I do it wasn't the question in this thread. it was how much do you risk

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  #19 (permalink)
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jamrock View Post
what happened to LTCM and many others along the way of using big data.

That's stupid thinking....as that was a once in one-hundred year event likely never to happen again.
Look at all of the other quant successes: Renaissance Technologies, DE Shaw, Citadel, Two Sigma, etc.
Their results would make you look silly.

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syswizard View Post
That's stupid thinking....as that was a once in one-hundred year event likely never to happen again.
Look at all of the other quant successes: Renaissance Technologies, DE Shaw, Citadel, Two Sigma, etc.
Their results would make you look silly.

you just named the winners there have been lots and lots of losers along the way but they sure as hell dont publicise them do they and
most of the ones you named have access to the mkt in ways you will never have no matter what your data says.

I can put together in 10 minutes a strat in R that in demo will make me 10 % a day and always work but in real life with slippage and fees and competition for my same
price and contracts it will lose money. theoretically based on math it always works and in application it usually fails unless you have and edge and right now the only edge is

1. speed and priority
2. member fees (low)
3. discretionary edge skill level

amaranth is one that failed
ljm partners
knight
fortuantely citadel etc hve a monopoly on speed and the regualtors to solidify their position in this NON FREE MARKET of ours

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jamrock View Post
fortuantely citadel etc hve a monopoly on speed and the regualtors to solidify their position in this NON FREE MARKET of ours

What a stupid statement. Unless they are spoofing for their profits, they are not doing anything wrong or illegal.
They're likely only pulling down +2 ticks max per trade on average. So for 100 trades per day, and 100 lot size, they are making 1/4 million per day with their algos.

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  #22 (permalink)
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syswizard View Post
What a stupid statement. Unless they are spoofing for their profits, they are not doing anything wrong or illegal.
They're likely only pulling down +2 ticks max per trade on average. So for 100 trades per day, and 100 lot size, they are making 1/4 million per day with their algos.

https://twitter.com/ljmpartners

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  #23 (permalink)
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syswizard View Post
What a stupid statement. Unless they are spoofing for their profits, they are not doing anything wrong or illegal.
They're likely only pulling down +2 ticks max per trade on average. So for 100 trades per day, and 100 lot size, they are making 1/4 million per day with their algos.

How much for 10,000 trades considering commission, slippage, and no/partial fills.

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  #24 (permalink)
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I vary my % based on recent performance. From 0.25 when I'm doing poorly to 2% max when I'm doing really well. Never more than 5%.

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  #25 (permalink)
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SidewalkAerobics View Post
How much for 10,000 trades considering commission, slippage, and no/partial fills.

The two ticks was net of slippage and commissions.

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  #26 (permalink)
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My little experience I had learning from VP at Nononsense Forex to not trade more than 2% of my Account at any one time has saved me a lot from potential total Account collapse. I used to pump massive portions of my Account into Trades that I hoped were very promising, while I had not tamed my emotions to trade more objectively. In consequence, I lost heavily on a few occasions from just even little diversion from my anticipated direction of the Market. When I forced myself to take the advice of VP more seriously, it soon dawned on me how highly reasonable that suggestion of trading within 2% of Account was. I noticed the little reversals that could have cost me a whooping loss became very manageable, and was able to rebound with better trades shortly later.

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AurumGem View Post
My little experience I had learning from VP at Nononsense Forex to not trade more than 2% of my Account at any one time has saved me a lot from potential total Account collapse. I used to pump massive portions of my Account into Trades that I hoped were very promising, while I had not tamed my emotions to trade more objectively. In consequence, I lost heavily on a few occasions from just even little diversion from my anticipated direction of the Market. When I forced myself to take the advice of VP more seriously, it soon dawned on me how highly reasonable that suggestion of trading within 2% of Account was. I noticed the little reversals that could have cost me a whooping loss became very manageable, and was able to rebound with better trades shortly later.

What about a daily loss limit ? 5%, 10% ?

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  #28 (permalink)
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LastDino View Post
It is, no doubt.
But then again, if you are scared of those fair punches, why box?

You might want to try that again.

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SunTrader View Post
You might want to try that again.

Nope, no messing with florida man, you win

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LastDino View Post
Nope, no messing with florida man, you win

Was looking for clarity - not a win.

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  #31 (permalink)
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syswizard View Post
What about a daily loss limit ? 5%, 10% ?

Trade 1 is a test to see if I'm reading the market correctly =1%

Trade 2 is 2%

Trade 3 can be 2% to 5%

If trade 1 and 2 are correct, I'll look to scale up. If wrong I scale down and if I get 3 wrong in row I out for a few hours if not the day.

Similar to how FT does it.

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syswizard View Post
@LastDino @SunTrader
Thanks for the denigration of this thread into stupid bickering instead of valuable feedback.

@syswizard,

They got a little off-topic, but were just kidding around about the Mike Tyson quote.

There's no need to call anyone "stupid" for any reason. We need everyone to remember the forum's standards of civility and mutual respect. I have taken the above post down, and I hope this will be the end of it.

Thanks.

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  #33 (permalink)
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text books and theories say 2%
but i think reality is with my own $ i would only risk 0.5%-max1%

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  #34 (permalink)
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GlobalTrader View Post
Trade 1 is a test to see if I'm reading the market correctly =1%

Trade 2 is 2%

Trade 3 can be 2% to 5%

If trade 1 and 2 are correct, I'll look to scale up. If wrong I scale down and if I get 3 wrong in row I out for a few hours if not the day.

Similar to how FT does it.

Very interesting bet-sizing strategy for day trading. I'll have to code this up for my automated strategy. I am very curious to see the results of putting in a "stop trading for the day" rule....after 3 losers in a row.
BTW: who is "FT" ?

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  #35 (permalink)
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GlobalTrader View Post
Trade 1 is a test to see if I'm reading the market correctly =1%

Trade 2 is 2%

Trade 3 can be 2% to 5%

If trade 1 and 2 are correct, I'll look to scale up. If wrong I scale down and if I get 3 wrong in row I out for a few hours if not the day.

Similar to how FT does it.

Sounds interesting. I have not seen that before. My problem would be that by the time I got to 5% the market would change.

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  #36 (permalink)
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syswizard View Post
BTW: who is "FT" ?

Probably FuturesTrader71 (real name: Morad Askar)

He has done numerous webinars for this site, one of them included a slide on position sizing which I took a screenshot of a long time ago and saved with other general trading stuff.
This was the picture below, with trade size on the right hand axis. The example starts with four lots and takes quite a few losses and gradually reduces size but then brings it back up as he starts having some winning trades.

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  #37 (permalink)
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matthew28 View Post
Probably FuturesTrader71 (real name: Morad Askar)

He has done numerous webinars for this site, one of them included a slide on position sizing which I took a screenshot of a long time ago and saved with other general trading stuff.
This was the picture below, with trade size on the right hand axis. The example starts with four lots and takes quite a few losses and gradually reduces size but then brings it back up as he starts having some winning trades.

Well, something is wrong with the chart....as it shows less than 1 contract for points at 9, 10, and 11.
Does that mean you need to go to MES ?
Does he divulge the formula used to develop the chart values ?

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

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

5. WHY NO THREADS about at what % to use to take profits? oh right the books say 1:3 risk reward so um ok 2 % x3=6 % take profit!
6. at 2 % you have what roughly 50 trades? if 90 % lose anyway do the brokerages want you bombing and losing 10 % at a time or 2 % at a time?
7. i say again why no talk or threads about taking profits and that % oh right because it changes based on teh mkt right oh ok sure and that % risk doesnt change why is that.

Example : 2020 feb to march back to aug 2020 rough estiamtes of price for example. using the cash mkts

i have 100k to invest/trade i must use all of it at once (btw most investorstake more risk and are better tradrs than 90 % of day traders!) if you disagree with this then please check your profits versus just buy and hold.

feb nasdaq at 9000
buy 100k of Nadaq at 9000
with 2 % loss rule I can risk $ 2000 dollars of loss and i must exit this trade!
9000x.02= this is equal to a 180 point drop in the nasdaq assumign I have 100k invested cash

I am out in a day. so then what i keep buying and exiting.
until when the mkt in march bottomed and i have what how much left from my 100k?

lets just say we stopped trading and i have 70K left after all of my 2 % stop outs. now what?
wwell the mkt reversed and rallied hard but guess what. on that way up there were tons of 2 % stop out points!! at losses even in a bull rally of epic proportions!!

but what if you risked 50 % of your "total amount I am willing to lose in this trade or investment"

buy 100k worth of nasdaq at 9000 risking 50 % so 50k an that would be
nasdaq 4,500 before you exit. so fabrurary and the march drops
you would have been down on paper but not out!! and you would have gained all of it and then some back as
the nasdaq went to 11,000!

yes I have hindisght bias but even if i didnt this would still work. the problem is that mkt direction and what you risk are 2 different things!
what is your personal skill set! how many % off of a typical bottom or a typical top are you wrong by? are you off by 180 points? 1 % 5 % that is what you should use is your own personal standard error in takign trades and use that to make sure you are in it to win it!!

Stop using leverage now. if you are trading futures to short then the margin doesnt matter . you trade 1 es micro for cash!! yes cash so
roughly a 1 lot micro for every 15k in your account! you are not hedging you should not be using leverage!!

if everyone understood leverage was for hedgers to make it cost effective and not day tradrs then maybe 80 % would be small winners and learn how to trade before the money was gone. i often risk 50 % of my entire accoutn on a trade why? because my account sin futures
are always VERY SMALL! one computer glitch with all that leverage and your "AMP" fcm goes bust and so do your funds sure they are protected..lol nothing against AMP but they were the last ones to pay after oil went negative and many thought they were going bust. i like amp by the way but from a big money standpoint i would not keep a lot of money at any low margin fcm/IB.

anyway use less leverage and stretch out your % risk based on what your trades are doing? if you do not know what you are trading or how or why or when and you can do a statistical analysis on your missed (losing ) trades then you have no clue how good you are!

do you miss the bottom by half a percent everyday ? then stretch out your % risk 1 % on the next one so you will be in the trade when it turns the
entire problem with retail is that they have rarely met or know or traded with or next to anyone who is actually consistently profitable so all they do is go on garbage in my opinion from online blogs and old books. it is all garbage in and grabage out so do your own thing and make sure it is different from all the other LOSERS! because believe me odds are 90 % on this blog and 90 % on fintwit no matter what they show are NET LOSERS !

good luck

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  #39 (permalink)
tampa florida
 
 
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matthew28 View Post
Probably FuturesTrader71 (real name: Morad Askar)

He has done numerous webinars for this site, one of them included a slide on position sizing which I took a screenshot of a long time ago and saved with other general trading stuff.
This was the picture below, with trade size on the right hand axis. The example starts with four lots and takes quite a few losses and gradually reduces size but then brings it back up as he starts having some winning trades.

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!
your entire account is not your daily loss limit is it? or maybe it is!!

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  #40 (permalink)
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syswizard View Post
Very interesting bet-sizing strategy for day trading. I'll have to code this up for my automated strategy. I am very curious to see the results of putting in a "stop trading for the day" rule....after 3 losers in a row.
BTW: who is "FT" ?

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.

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  #41 (permalink)
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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)
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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)
Palm Harbor, Florida/USA
 
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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)
tampa florida
 
 
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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)
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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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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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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)
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Around 0.4%, i'd say. max i go up till 0.6%.

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  #49 (permalink)
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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 futures.io mobile app

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  #50 (permalink)
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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  #51 (permalink)
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Tiffsgreta View Post
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?

What is that?

Especially the futures part since you are talking about trading options.

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  #52 (permalink)
Kanab utah/usa
 
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SunTrader View Post
What is that?

Especially the futures part since you are talking about trading options.

@SunTrader my trades are more obscure than I thought. I sold a March corn 3.8 strike put. I bought a january soybean 10 strike and sold a january 9.6 strike. These are options on the underlying futures contracts. These are longer term swing trades that I don't have to watch every minute. Hope that helps :-)

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  #53 (permalink)
Kanab utah/usa
 
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thanks for your input!

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