How much percent should we risk per trade?

Question

Charles · Accepted Answer

The question is impossible to answer. Few-day traders share their results with anyone other than the Internal Revenue Service (IRS). In addition, results vary greatly because of the myriad of trading strategies, risk management practices, and amounts of capital available for day trading.Setting stop-loss orders and profit points—and not taking too many risks—is crucial to surviving as a day trader. Professional traders often recommend not risking more than 1% of your portfolio in one trade. If a wallet is worth $50,000, the highest risk per transaction is $500.

Ross · Answer

A general rule of thumb is that traders shouldn't risk more than 1% or 2% of their capital per trade. Traders must have the discipline to exit trades when their maximum allowable loss is reached. Using a conservative risk limit is a good idea because you never know when a trade will move unexpectedly against you and you may sometimes lose more than you anticipated.

Vernon · Answer

It’s a good rule of thumb to allocate no more than 2% of your assets to any trade or group of trades that you might simultaneously place. Even if you believe the currency pairs you are investing in are not correlated, you should still think of all of them that are open at the same time as one trade from the point of view of risk management. That’s because a world event, a crisis, or unscheduled news could occur at any time that would have an impact across all financial instruments and the results could be devastating for you.The reason to keep your risk tightly controlled can be seen through this simple math quiz. If you lose 10% of your starting equity how much will you have to make to get back to where you started? Think about this for a minute and come up with your own answer before you read mine.The most common answer is 10% because you’ll think “Oh if I had $1000 and lost $100, I only need to make $100 back”. But think of this in percentages. If you lose 10% of your account, it is now only worth 90% or $900. If you make 10% on that money, you’ve now made $90, so you’re only up to $990. You actually have to make 11.1% to come back to the whole.The more you lose the worse this scenario gets. If you lose 20% of your account you need to earn 25% returns to get back to where you started. The odds then become so egregiously stacked against you that you get backed up against the wall and can seldom recover.You get the picture. While the allure of using high risk to make huge profits is appealing, the reality is that the downside of high risk can be so expensive that you can quickly dig a hole that you can never get out of.So think fondly of 2% risk. If you lose it you only have to make 2.05% back to get whole again.

How much percent should we risk per trade?

6 Answer

6 Answer

How much percent should we risk per trade?

6 Answer

6 Answer

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