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% of balance to open positions

cris224
Dec 11 2012 at 21:14
3 posts
I think the risk level is a matter of your goals and your risk tolerance.

I use 5% for now - The maximum I can loose in any one trade if my initial stoploss points are hit is 5%. But my account is still small and I can take this kind of risk.

With a 100-200k account, I would reduce the risk to maybe 2%. This will still give me a good return.


Gary Sharp myfxpt com
myfxpt
Jan 16 2013 at 22:25
345 posts
Generally I risk 2% of equity. But...I also watch my win/lose ratio and average win/average loss per symbol. Where I achieve a very low Risk of Ruin I increase risk to 5% on equity, but on high risk of ruin I reduce risk to 1% or less of equity. Works for me.

rjm354 (rjm354)
Jan 17 2013 at 04:37
42 posts
thanks cris224 and Gary

helpful info

Fxringleader (Fxringleader)
Jan 17 2013 at 06:26
95 posts
Risk 1% Spread out over 3-4 Pairs. Anything more and its A Casino - Cash out as a basket...

Risking for example 5% (is stopped out and lost) means you need to trade like 7% to break even. so start with the bare minimum amounts... you end up with an inverted curve, people who trade more then 2% run the risk of a blow out eventually.

forexpipcatcher
Jan 18 2013 at 10:56
286 posts
Fxringleader posted:
Risk 1% Spread out over 3-4 Pairs. Anything more and its A Casino - Cash out as a basket...

Risking for example 5% (is stopped out and lost) means you need to trade like 7% to break even. so start with the bare minimum amounts... you end up with an inverted curve, people who trade more then 2% run the risk of a blow out eventually.


Knowing your win to loss is very important in deciding what ROA. I started on here with a 5% ROA not ROI, provided the win to loss ratio was well over 50% and risk to reward was 1:1 you would need more than 20 consecutive losing trades to blow your account, this probability favours you to being successful. However, with those figures you become an ATM lol.
Anywhere between 2 and 5 is suffuicient for a healthy lifestyle as long as you don't play catch up like risking more on the next trade and more on the next etc when you get a losing one or two etc.
Right/wrong?

it's all in the maths

cris224
Jan 18 2013 at 14:36
3 posts
It all depends on the system one uses. I know of a very successful trader that has a 30/70 win to loss ratio. I am taking about number of wins vs. number of losses here.

The stoploss should be the last resort of getting out. I have few criteria of cutting my losses built in my system, and it gets me out before the stoploss is hit. So the 5% risk is actually conservative.... the average loss is around 2%.

Trading is a losers game....Those who learn how to loose small, win in the long run.

rjm354 (rjm354)
Jan 20 2013 at 05:42
42 posts
Im not talking about placing stops. I'm talking about what percent of your account you use to open positions. Everyone seems to keep answering with 'risk' . Risk means how much of your account you use to place your stops.

For example. If I have $10,000 in my trading account and risk 5% for my stops. Thats $500 bucks I use for my stops.. Right ?
 So my stops are set at $500 . I can spread that $500 over 2 trades or 3 trades. or whatever.

So I have $9500 left in my account now to open positions .

How would you handle this ?

I understand everything about pip value . $1 per pip $5 per pip $10 per pip $100 per pip etc.

Im really just wondering how much of that $9500 do each of you use to open positions.

If your a scalper do you use most of that $9500 ?
If you trade the daily chart your stops are larger maybe 60 pips or even 100 pips. Do you use $5000 of that $9500 to open positions?

would you open 4 $2000 positions total $8000 and spread the $500 for stops over all 4 trades. $125 stops for each trade.

Mike Yap
mikeyap9
Jan 20 2013 at 07:03
65 posts
Ray, I think you are confusing risk per trade with margin utilization. I use 1% risk per trade and I use up to 50% of my account on margin. Let say each trade requires 5% of my balance for margin, then I can only have 10 open trade at the same time according to my rules. Each one of them has 1% risk, so my total risk is only 10%.

forexpipcatcher
Jan 20 2013 at 07:49
286 posts
mikeyap9 posted:
Ray, I think you are confusing risk per trade with margin utilization. I use 1% risk per trade and I use up to 50% of my account on margin. Let say each trade requires 5% of my balance for margin, then I can only have 10 open trade at the same time according to my rules. Each one of them has 1% risk, so my total risk is only 10%.


Very impressive Mikey lol you must be very very experienced. With that kind of experience if applied correctly you could make a real good living.

rjm354 (rjm354)
Jan 20 2013 at 21:41
42 posts
mikeyap9 posted:
Ray, I think you are confusing risk per trade with margin utilization. I use 1% risk per trade and I use up to 50% of my account on margin. Let say each trade requires 5% of my balance for margin, then I can only have 10 open trade at the same time according to my rules. Each one of them has 1% risk, so my total risk is only 10%.


Thanks Mikey,

That's exactly what I wanted to know . Nobody except you has said what % of their account they use to open positions. Everyone is talking about placing stops ( or total risk )

The title of this thread is % of balance to open positions. It is not % of risk.

I do in fact understand the difference between risk and margin.

I was just curious how much of your accounts all of you professional traders use to open positions. And you are the only trader to actually answer that question.

50% of your account to open positions

So according to your rules . if you have $10,000 you risk $1000 ( spread over several trades ) and then use $5000 to open positions . Leaving $4000 unused in your account.

Thanks very much

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