100K Account Risk/Reward

Discussion in 'Risk Management' started by ligerny, Aug 6, 2008.

  1. ligerny


    Just curious here what are the maximum loss per trade and risk reward are you guys using here as well as what's ur average profit per trade for accounts if anyone trades 100k+ size accounts?

    Im refferring to stocks specifically
  2. For 100k in my experience and opinion:
    Max loss 2% of capital per trade.
    Position size max 15% of capital.
    Average profit runs around 10%, range 8-15%
    Must have 2.5 to 1 (minimum) reward/risk ratio.
  3. KK70


    Very good guidelines.
  4. ronblack


    I agree but why do you have to limit position size to 15% of capital if you have already set the max loss at 2%?

  5. The reason is overnight risk and/or general single instrument risk. Bad news in a stock can easily cut the value in 1/2 without you being able to get out (example NYSE halts, acct fraud, product recalls, litigation etc.). So, in a situation like that you don't want to have all your capital in a single issue. With 15% exposure, a sudden 50% drop in price "only" sets you back 7.5% on your account instead of 50% on your 100K account.


  6. Don't put all your eggs in one basket.

  7. for a smaller account would you tolerate greater risk or keep it the same/similar like say 50k and maybe 20k accounts. And to fulfil the 15% in one instrument requirment in the smaller accounts would you simply look at instruments that are priced lower in order to always have round lots???
  8. Brandonf

    Brandonf ET Sponsor

    Because your talking about RISK managment, and even though you think you have set your max risk to 2%, that's a nice idea but not always true. Anything could happen, maybe the accountant has been robbing them blind and suddenly you find the stock halted, when it opens its going to be down 50%. If you trade long enough it will probably happen to you.

  9. Exactly.
  10. sorry to be rude, can anyone answer this?

    #10     Aug 10, 2008