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# Am I trading too risky?

Discussion in 'Forex Trading' started by peilthetraveler, Nov 15, 2009.

1. ### davidmaria1

Checked my leverage. 20:1
I trade \$/pip value anyway.

#21     Nov 18, 2009
2. ### TheRumpledOne

If you want to risk 2% of your account per trade:

RISK = 0.02 * ACCOUNT BALANCE

RISK = STOP LOSS * POSITION SIZE

Set your STOP LOSS and calculate your POSITION SIZE

or

Set your POSITION SIZE and calculate your STOP LOSS.

#22     Nov 18, 2009
3. ### cabletrader

Mine's set at 50:1 but like you say it's all about \$/pip value not how much margin one uses, it could just as easily be 500:1 for all the difference it makes!

#23     Nov 18, 2009
4. ### cabletrader

Huh

Try...

(Equity x Risk %) / Stop Loss = \$ value per pip = trade size.

Example for EUR/USD:

(\$10,000 Equity x 1% Risk) / 40 pips Stop Loss = \$2.50 value per pip = 25k trade size.

#24     Nov 18, 2009
5. ### TradeViper

Remember this, DEFEND AND PROTECT you capital.

The Ever "este balsero no sabe que rayo esta diciendo" VIPER

#25     Nov 18, 2009
6. ### ssb11

take your last 300-500 trades and convert them to a ratio of your + or - divided by your initial risk. (so, if you made 200 points and risked 100 you would have a +2.00.) list them down column a beginning row 2. in b1 place a %; in c1 place a beginning account value. then use column b to multiply the % by the account value by the ration outcome. adjust the account value by that number. repeat.

by changing the % you can see your return curve vs. various levels of risk. you will see the returns increase dramatically, level off, begin to decrease, and will eventually even take a positive edge negative should you risk enough. you can approx your optimal risk and better yet a point to its left at which the curve begins to plateau. as an individual trader i can see no reason to trade smaller than this or near this level.

set standard of living upside markers for yourself and take \$\$ out of the account once they are achieved. you may wish to start your trading with an active and inactive portion to bolster the account should you start with a large dd.

ssb

#26     Nov 18, 2009
7. ### cabletrader

la vÃ­bora habla con lengua sabia!

#27     Nov 18, 2009
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