Risk management and position size

Just curious to see how others manage their risk and position size

Do you trade a fixed Lot size of lets say three lots and then determine if the trade setup is within your risk % parameter? If not, you don't take the trade.

Or do you trade with a fixed risk percentage and adjust your lot size accordingly and take every trade thrown at you?

Risk management is a very important point in trading, which helps us avoid unnecessary mistakes.

I trade with a fixed risk percentage and adjust the lot size accordingly.

While entering a trade, I calculate the stop loss and take profit. I never trade without them and that’s what has been helping me in saving my money.

joastdaffy posted:
While entering a trade, I calculate the stop loss and take profit. I never trade without them and that’s what has been helping me in saving my money.

That's the right thing to do.

Firstly, I set the percentage of risk which I can afford and then think about the lot size.

I trade at the risk reward ratio of 1:2 to minimize the losses and keep the profit in margin

For managing risk, I usually try not to risk more than 1 or 2% of my total capital and trades. This has become an effective strategy for me and has worked out well so far.

I try not to risk more than a certain percent of my profit. Works for me.

It is better to focus on risk management than to ignore it and I generally don’t risk beyond a certain point. Keeping it to about 2 to 3% of your trade helps a lot.

No, there is never a specific setting that I use while trading. It varies from trade to trade and currency to currency. But yes, the risk is never more than 5% of my total trading capital.

kc8yty posted:
Just curious to see how others manage their risk and position size

Do you trade a fixed Lot size of lets say three lots and then determine if the trade setup is within your risk % parameter? If not, you don't take the trade.

Or do you trade with a fixed risk percentage and adjust your lot size accordingly and take every trade thrown at you?

I have strict rules I follow:
They are in categories based on how powerful I believe the trend will be.

Weak/ sideways ranging markets (quick pop/drop and that's it) I will have several positions open for only 0.01 lots over 10 pairs.
then when I see one pair that stands out and have NEVER gone back to negative in the past hour during premarket, when the market opens I increase position size to 5-10 lots, then close the trade within the first 10 minutes. This can make me a quick $800 to $1,000 in 20 pips.

On a moderately strong or mildly probable trade, I will pick up 0.1 to 0.2 lots and then watch to see if my timing was correct. If it is I will increase to 0.8 to 1 lot.

High probability/ strong trend These I will get in around 0.1 lot and then when it hits 5 pips to 7 pips I will increase to 1 lot and then if it hits 10 pips I go in 2.5 lots total. Get out at 20 pips minimal. I have held all the way to 300 pips before... then held as if fell all the way back to 157 pips and closed the trade. That's a $15,000 profit. I average between $1,400 to $1,600 profit per trade.

I have stric risk management policy. I risk maximum 2% of my capital. And I open only one trade at a time. Once I closed that trade, I think for next trade.

UweMoench posted:
I have stric risk management policy. I risk maximum 2% of my capital. And I open only one trade at a time. Once I closed that trade, I think for next trade.

Managing risk is the toughest job in this market.

@SteveHanks It can be the toughest but it is very important. Limiting the use of leverage and using a stop loss can be really helpful while applying risk management to your trade.

In forex, risk management is important for traders, and I would like to know which is the best risk management strategy and position size?

The trader succeeds only when he manages the proprietary risk and trades. I must learn this experience. As much as I don't know about strategy, I have to manage risk.

jonathandaniel posted:
No, there is never a specific setting that I use while trading. It varies from trade to trade and currency to currency. But yes, the risk is never more than 5% of my total trading capital.

Yes. You are right.

LukeRachel posted:
The trader succeeds only when he manages the proprietary risk and trades. I must learn this experience. As much as I don't know about strategy, I have to manage risk.

you need to take risks from time to time, here I completely agree with you