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5% risk per trade?

  • #141
  • Mar 1, 2018 4:45pm Mar 1, 2018 4:45pm
Quoting Erebus
I'm guessing everyone here is interested in math; this is worth a look All facts, like increase 7% of anything 10 times and it will double So risk, 3.5% at 2 to 1 reward to risk, 10 winning trades and you just doubled your account
Many thanks for sharing this very thought provoking video. I watched the first 35 minutes or so. Little wonder that Einstein was quoted as saying that compounding was the 8th wonder of the world (e.g. here). With just a small but robust edge, vast returns are mathematically possible (more here).

On the face of it, winning 10 trades at 2:1 RR sounds easy enough. This is the same type of idea put forward in threads like this one. However, everything else being equal (for example, if we use random entries and exits) the probability of obtaining a win at 2:1 RR is 1/3 or 33.3% (because the SL is approximately twice as likely to be hit before the TP). Suppose we lower this probability to 30%, to allow for costs (spread, slippage,...). Then the probability of obtaining 10 consecutive winners is 1/(0.3^10) or 1 chance in 169,350. Possibly not quite as easy as it might seem.
  • #142
  • Mar 2, 2018 12:06am Mar 2, 2018 12:06am
Quoting ThugLife
{quote} Do you make 68% each month from your trading system, while only risking 1% of your portfolio?
I gauss; his trading strategy produces 68% accuracy (means 68 wining trades around the 100).
  • #143
  • Mar 2, 2018 4:12am Mar 2, 2018 4:12am
Generally I try to control my risk ratio by means of my money managing plan, and most of the time I can. But when it is time to scalp I can’t maintain my risk ratio and fall a great trouble generally due to increasing risk level, for that reason now I thinking to quite scalping that always contains unfortunate risk.
  • #144
  • Mar 21, 2018 2:54am Mar 21, 2018 2:54am
Quoting MarkFxAnde
Generally I try to control my risk ratio by means of my money managing plan, and most of the time I can. But when it is time to scalp I can’t maintain my risk ratio and fall a great trouble generally due to increasing risk level, for that reason now I thinking to quite scalping that always contains unfortunate risk.
Don’t open multiple trade’s position at a time! I had the same problem, and now I don’t open more than 2 trades but never in the same pair.
  • #145
  • Apr 11, 2018 1:49pm Apr 11, 2018 1:49pm
Quoting MarkFxAnde
Generally I try to control my risk ratio by means of my money managing plan, and most of the time I can. But when it is time to scalp I can’t maintain my risk ratio and fall a great trouble generally due to increasing risk level, for that reason now I thinking to quite scalping that always contains unfortunate risk.
Same condition I have. So many times I did huge losses when scalping due to lack of real risk managing plan.
  • #146
  • Edited 2:37pm Apr 11, 2018 2:17pm | Edited 2:37pm
Quoting hanover
{quote} Then the probability of obtaining 10 consecutive winners is 1/(0.3^10) or 1 chance in 169,350. Possibly not quite as easy as it might seem.

Then i guess me, my wife and some people that i know from this forum are some sort of aliens or something because THEY can pull 10 in a row; not every time but not as hard/uncommon as you make it sound..

DISCLAIMER:

OH !! and before you get offended or something (stupid over sensitive world we live in now) im not attaking you or saying you are lying or anything like that !!

is just that theory and practice sometimes they just dont match to each other; Thats the my point

If you are not mad or offended and you understand my point.. then Bypass my disclaimer =)
  • #147
  • Edited Apr 12, 2018 1:50pm Apr 11, 2018 7:02pm | Edited Apr 12, 2018 1:50pm
Quoting havo
Then i guess me, my wife and some people that i know from this forum are some sort of aliens or something because THEY can pull 10 in a row; not every time but not as hard/uncommon as you make it sound..
As Churchill once said "you can't take sides against arithmetic". Anybody with a basic knowledge of probability math can easily verify the calculation I gave.

People win the lottery against almost impossible odds. But that doesn't make the probability calculations wrong. Indeed, there are outliers in every statistical distribution.

With trading there is potential to shorten the odds by employing a strategy with superior entries/exits.

Math has no emotion. It doesn't get offended.
  • #148
  • Apr 12, 2018 2:12am Apr 12, 2018 2:12am
Quoting KingKaivar
So I was running through some montecarlo simulations, using different levels of risk. Most people recommend 1-2% equity risk per trade, which is fine. But is anyone trading above these values? I checked a trading system with 2,500 theoretical trades at 5% risk, 50% win rate, 1.25-to-1 reward-to-risk, and the numbers are mind-boggling ($10,000 starting equity turned into $1b equity). Of course, at higher risk, your drawdowns are going to be greater. At 5% risk, I saw drawdowns up to 70% or above. I'm unsure whether humans can bear such losses. Thoughts?...
5% if fine if 100% sure about your analysis or If you already know what you doing especially if Martingale Money Management is not used.
  • #149
  • Apr 12, 2018 3:05am Apr 12, 2018 3:05am
Quoting Guufuj
{quote} 5% if fine if 100% sure about your analysis or If you already know what you doing especially if Martingale Money Management is not used.
5% isn't fine for 99% of people.

The problem with people here is that they ask questions that they have already formulated the answer to.

You can tell people over and over that they need to adjust expectations, but they always have in the back of the mind that it's not 100% true, and that they will be OK. Frankly, is it and they won't.

Doesn't help that there are so many keyboard warriors with no real industry experience spouting crap half the time.
  • #150
  • Apr 12, 2018 3:24am Apr 12, 2018 3:24am
Quoting Catch-22
{quote} 5% isn't fine for 99% of people. The problem with people here is that they ask questions that they have already formulated the answer to. You can tell people over and over that they need to adjust expectations, but they always have in the back of the mind that it's not 100% true, and that they will be OK. Frankly, is it and they won't. Doesn't help that there are so many keyboard warriors with no real industry experience spouting crap half the time.
I guess you don't understand my reply man. Let me repeat. 5% is fine only if you 100% sure about your analysis or already know what you doing in this trading business.


There are people using from 0.1 to 1% but they still blowing their accounts. What about that? Do you expect them to go lower than that or forget about this trading?


I am talking about experienced people already in the market. Again 5% is fine for them.
  • #151
  • Apr 12, 2018 4:47am Apr 12, 2018 4:47am
Quoting Guufuj
{quote} I guess you don't understand my reply man. Let me repeat. 5% is fine only if you 100% sure about your analysis or already know what you doing in this trading business. There are people using from 0.1 to 1% but they still blowing their accounts. What about that? Do you expect them to go lower than that or forget about this trading? I am talking about experienced people already in the market. Again 5% is fine for them.
I've never ever seen an account which risked 1% and blew their account, and I have seen about 6,000 forex accounts; mostly blown. People who risk 1% invariably lose some trades and take off their stop loss, couple months later they are gone. If someone did risk 1% and blew their account completely risking only 1% per trade, they are doing something seriously wrong - I certainly wouldn't tell them to increase their risk if they are losing that badly.

That being said a couple of people risk 5%+, and maybe 0.001% of traders that do are successful, as long as you are making money it doesn't matter.

There are some high level MM systems that are a strategy in themselves that are the exception, but everything needs to be calculated out to ensure the long-term survival of the account.
  • #152
  • Apr 12, 2018 5:41am Apr 12, 2018 5:41am
Quoting Catch-22
{quote} I've never ever seen an account which risked 1% and blew their account, and I have seen about 6,000 forex accounts; mostly blown. People who risk 1% invariably lose some trades and take off their stop loss, couple months later they are gone. If someone did risk 1% and blew their account completely risking only 1% per trade, they are doing something seriously wrong - I certainly wouldn't tell them to increase their risk if they are losing that badly. That being said a couple of people risk 5%+, and maybe 0.001% of traders that do are successful,...
I really agree with you! I have also seen pro traders always maintain the money management rules very carefully! Using more than 2% risk reward ratio is really risky.
  • #153
  • May 2, 2018 3:13pm May 2, 2018 3:13pm
Quoting Majeeda
{quote} I really agree with you! I have also seen pro traders always maintain the money management rules very carefully! Using more than 2% risk reward ratio is really risky.
Managing 2% risk until closing any order its not an easy task , pro trader can manage their risk ratio accurately because of having long term experience. but as a beginner there is no chance to keep 2% risk for all time , but if we practice more and more above all in demo account there is a possibility to become knowledgeable about risk management that can handle our risk ratio accurately.
  • #154
  • May 11, 2018 6:13pm May 11, 2018 6:13pm
Risk ratio doesn't sustain at all in the same position, its always volatile. it can be volatile from 2%-5%. but if this calculation increases , then you have to understand you don't know how to manage risk.
  • #155
  • May 13, 2018 11:00pm May 13, 2018 11:00pm
Every Trader is having his own risk management according to which he takes risk of his money and manage the trade so that he can win maximum pips.
  • #156
  • May 19, 2018 3:26pm May 19, 2018 3:26pm
Quoting AlexImam
Risk ratio doesn't sustain at all in the same position, its always volatile. it can be volatile from 2%-5%. but if this calculation increases , then you have to understand you don't know how to manage risk.
I think, when you have such an outstanding success ratio with your trading system like 96% even more, only than you can use 5% (it’s too much high & risky).
  • #157
  • May 20, 2018 5:09am May 20, 2018 5:09am
Quoting Butterscotch
Every Trader is having his own risk management according to which he takes risk of his money and manage the trade so that he can win maximum pips.
Yes it is, we the traders generally choose our trading strategies according to our trading understanding and we know how much risk we can take when trading practically. In my trading career , I am not capable to manage my risk ratio during news due to lack of real fundamental knowledge , that’s why I always avoid news trading even though news trading is profitable.
  • #158
  • May 15, 2019 8:50am May 15, 2019 8:50am
Quoting TPOTrader
{quote} What this guys said. DOn't be an excel spreadsheet trader either. I see a lot of that in this forum. 1-2% risk makes sense only if you are just starting out and have no clue to what the hell you are doing. Once you have an edge in the market, increase your betting size! use the leverage but still maintain that reasonable risk per your method.
How to calculate reasonable risk per win rate?
  • #159
  • May 15, 2019 10:06am May 15, 2019 10:06am
I utilized 10%. presently down to 5%. I don't diminish wager in the wake of losing, so 20 misfortunes out.
As I am optional, locate that bigger wager spurs me and results are better. 1-2% toooo little.
Be that as it may, I go papertrade after 3 overall deficits from high ie 15%. Guarantee that my framework still alright and after that back. Most reduced I accompanied this I believe was 6 misfortunes.
  • #160
  • May 16, 2019 5:14am May 16, 2019 5:14am
what percentage risk is comfortable when trading during news ?
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