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.

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.

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.

Unellene posted:

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

Trading is a risk, but it is not possible to work with 100% probability. So you have to try to manage the risk ratio.

Fixed risk and adjust lot size. Decent calculator on the site to help with this. Concern yourself first with how much you stand to lose rather than what you stand to gain.

As far as I concerned, position size should be directly depended on your risk management strategy. Every trader knows how is it important to have a proper risk manegement strategy and some traders wonder why the strategy can be variable. I know that novices think that risk management strategy is stable and everybody uses it. However, the vast majority of traders create their own risk management strategy according to their needs in trading activity, their deposit and other vital things. Hence, I believe that if you're unsure how much money yu can invest in a certain deal, then you should think about risk management. Decide which amount of money you an afford yourself to lose.

Major Forex crosses, minor pairs as well as the most popular cryptocurrency pair. From this place traders calculate risk percentage ($ 4, $ 20, $ 50) etc. Professional traders do not risk more than 2% of their investment. And this is their position and risk calculation.

Proper position sizing determines how long you are going to last in the game. It determines how many losses you can take before blowing your account.