you know there are some pretty successful traders on ET, but frankly I am sick and tired of OLD school notion by even THE ELITE traders that you can only risk 1 or 2 percent of your portfolio on any single trade. WRONG I risk 10 % on my day trading account, I have a larger investment account but on a day trading account IF you know what you are doing, risking 10 % is something that YOU SHOULD be doing. frankly all you traders out there, if you are risking only 2 percent of your trading account, you are WASTING you time. I mean think about it if you are a seasoned trader why in the world would you be moving like a god damn snail. No good reason I can think of, I have 50 k in trading account and I regularly risk 5k on single trade. Look, if you are afraid of losing larger portion, you my friend don't know what you are doing I am afraid of wasting my time and not making as much as I should. So I act on it. Am I right, or am I right !
well, you say you have a large investment account. this 2% "rule" is there in order to protect you from getting broke on a ("bad luck") loosing streak. But since you won't be out of business if you get broke or down to 25k, it's sure ok to risk more per trade... I have around 100k in my IB account, however i risk never more than around 500 bucks per trade, but also make profits of only about 1000$, (typically trading 1000 shares when trading around 20$). I thought about increasing the sizes (risks), but i don't feel confident enough, and there's also the psychological aspect, risking 1% of my trading account is much easier, than beeing exposed with say 10%... with this 1% rule i have no problems to stick to my rules, for example leave stops where they are, and not getting too nervous.. just because i can afford some loosing trades in a row. However lately due to good success i may soon will increase my default size to 2000
i want to add that it depends very much on your trading style imho. With my technique (more loosing trades with small losses than the big winning trades) it's different to someone who makes lots of small winner, with a small risk for a bigger loss. by the way: this "more loosing trades with small losses than the big winning trades" (since stops much nearer to entry than profit target) has lately not really been true (last 5 Trades were winners) ... thank to nice market moves...
Yes these are good points, its funny how we traders always assume that others are doing similar stuff. Many different ways to skin the cat. I know a few traders that would stick to their way of trading EVEN when shown a better way weird huh
I am no where near the best trader on these forums but I do follow the 1% risk per trade rule. The reason? No matter how good you are, you can run into a losing streak. Risking 10% per trade means that such a losing streak could mean financial ruin or at the least one hell of a bad experience. I like to know that in case something horrible happens, I will have the means to stick around for the next day. Bottom line: Hope for the best, prepare for the worst.
i have got to make a few more posts. everytime i start to make a post, i have forgot my password. i don't use 2% or 10%, but a sliding scale with a minimum and a maximum. the scale is based on recent volatility compared to an average. i guess you could say it all depends on if the beast is sleeping, starting to wake up, or running like its butt is on fire.
Personally, my risk size depends a lot on the timeframe of the trade I'm doing. I'll take more risk on a longer-term position trade because they are less frequent - meaning fewer potential losing trades over a given time span. For a short-term trading strategy where the ins and outs are frequent, my risk is smaller because a string of losses can do a lot of damage very quickly.
Hey man whatever works for you but you would not catch me risking more than that on any given trade. Albeit, I'm a scalper. Risk management is extremely important in trading. Anek
There is a difference between how much you risk, and how much you utilize. You can utilize 10% of your trading capital while still only risking 1-2%...