What should be the risk percentage?

Actually risk percentage depends on many factors. How much you can tolerate is a factor. It also associated with your winning ratio. A trading strategy is a combination of all factors according to your skills, capital, risk tolerance power. You have to make a system so that you can survive in the market and make profit.

Agreed but that being said a rule of thumb for beginners is 1-2% regardless of RR per trade. How many trades are placed at once is another question. Personally no more than 3 at a time

I don't think you should risk more than 2% for a trade. If you risk more than 2%, it will never be under the management of money management.

AliaDare posted:
I don't think you should risk more than 2% for a trade. If you risk more than 2%, it will never be under the management of money management.

Yes, exactly the advice which I was also thinking of. We should not adopt the risk over 2% to keep our trade safe.

It actually depends on a trader's risk tolerance, Different with everyone. Hard to standardize.

I agree with you. I never risk more than 1-2% to be on the safer side in my trades.

1% risk max.

Personally I give myself 2% risk

The risk-reward ratio measures how much your potential profit is, for every dollar you risk.
If you have a risk-reward ratio of 1:3, it means you’re risking $1 to make $3.

Either 2% or 1:2 risk ratio are fine

Traders should not take more than 5% risk per trade. That’s why traders can survive in the market long.

It is wise to not risk more than 2% of your trade. This will be safe and you won’t end up losing a lot.

downtown posted:
Either 2% or 1:2 risk ratio are fine

Is there any strategy or any method to set the risk reward ratio for a day trader like me?

phillipgriffin posted:

downtown posted:
Either 2% or 1:2 risk ratio are fine

Is there any strategy or any method to set the risk reward ratio for a day trader like me?

Call it a strategy or not, there’s actually a simple formula that asks you to compare the amount you’re willing to risk on the trade to the prospective gain. Statistically speaking, if you’re planning to have a prospective profit of $600 as compared to a projected risk of $200, the risk reward ratio in this case would be 1:3. So, now if you place say 10 trades with a ratio of 1:3 and only made profit in 3, you would still make $400. A decent amount of profit despite being correct only 30% of the time.
The 1% rule can give you the leverage to withstand a long string of losses. However, before you plan on risking even 1% of your money, I’d suggest you to practice on the demo account. I did the same with my brokers Fxview and IB to have a better understanding of how the market works.

phillipgriffin posted:

phillipgriffin posted:

downtown posted:
Either 2% or 1:2 risk ratio are fine

Is there any strategy or any method to set the risk reward ratio for a day trader like me?

Call it a strategy or not, there’s actually a simple formula that asks you to compare the amount you’re willing to risk on the trade to the prospective gain. Statistically speaking, if you’re planning to have a prospective profit of $600 as compared to a projected risk of $200, the risk reward ratio in this case would be 1:3. So, now if you place say 10 trades with a ratio of 1:3 and only made profit in 3, you would still make $400. A decent amount of profit despite being correct only 30% of the time.
The 1% rule can give you the leverage to withstand a long string of losses. However, before you plan on risking even 1% of your money, I’d suggest you to practice on the demo account. I did the same with my brokers Fxview and IB to have a better understanding of how the market works.

Ok, so I do understand that the 1% rule is for the beginners, rather it’s the most critical rule they need to set and follow. But what if I’ve spent years trading? Do I still need to follow this risk reward ratio?

phillipgriffin posted:

phillipgriffin posted:

phillipgriffin posted:

downtown posted:
Either 2% or 1:2 risk ratio are fine

Is there any strategy or any method to set the risk reward ratio for a day trader like me?

Call it a strategy or not, there’s actually a simple formula that asks you to compare the amount you’re willing to risk on the trade to the prospective gain. Statistically speaking, if you’re planning to have a prospective profit of $600 as compared to a projected risk of $200, the risk reward ratio in this case would be 1:3. So, now if you place say 10 trades with a ratio of 1:3 and only made profit in 3, you would still make $400. A decent amount of profit despite being correct only 30% of the time.
The 1% rule can give you the leverage to withstand a long string of losses. However, before you plan on risking even 1% of your money, I’d suggest you to practice on the demo account. I did the same with my brokers Fxview and IB to have a better understanding of how the market works.

Ok, so I do understand that the 1% rule is for the beginners, rather it’s the most critical rule they need to set and follow. But what if I’ve spent years trading? Do I still need to follow this risk reward ratio?

Well no, that entirely depends on your comfort as a trader to bear the loss. See, the 1% rule can be twisted depending on your account size and the market. You simply need to set a percentage that you’re comfortable playing and risking around with. Once done, all you have to do is calculate your trade’s position size depending on the entry price and stop loss.

Actually, every trader decides by himself, what risk percentage to set. The genral rules sound like never open a position with more than 2-3% from your total deposit. However, traders don't often comply with this rule. Every trader wants to get as much money as he can, so he decides to open a position with 10-20% or the whole amount of deposit. It's prohibited, in case you want to build long-lasting trading career. Nevertheless, there are some traders who can open position with a half or the full of the deposit, but they're professionals and often they know what to do.

Really does depend on your own risk tolerance. Personally I only risk 1-2% on a single trade. Maybe 3% if it's something I'm extremely confident about.

1-3% is ideal as according to probabilities in 10000 trades you will have a run of 13 straight losers. Now that may seem like a lot of trades but if you're in this for the long haul you'll hit that and also there is no way to determine when they will come so could come at the beginning of your career