How much risk capital should one use in a single trade?

Discussion in 'Risk Management' started by OddTrader, Sep 14, 2010.

  1. Hello folks

    How much risk capital should one use in a single trade?

    Should it be 5%,10%, 25%, 50%, 75% or even 100% from the risk capital?
    What do you think?

    I thing that the market is so predictable (however still with certain uncertainty), that one mustn't risk less than 50%. This should stay between 50%, 75% and max 100%. Otherwise one can get hurt (opportunity cost/profit) quite heavily.

    So, what do you think?
  2. In your case risk 0%

    The fact that you've asked such a fucking stupid question implies that you're way out of your depth.

    Save the dough for retirement!
  3. 0008



    many guys would want you to do so
  4. If you trade fx spot(especially GBP/USD), please use all of it!, it will all fall into my pocket :D

    How much you risk depends on how sure you are the trade you're taking will move your way. On high probability trades, I use 50%-75% of my capital. On trades that don't meet enough criteria as a high probalility trade, I will start out at 25%-30%. Then if the trade starts making me money then I will scale in(add to the position) as I see fit.
  5. Odd, is that you!? I like that cow boy attitude, man... WTG!! :D

    <object width="480" height="385"><param name="movie" value=";hl=fr_FR"></param><param name="allowFullScreen" value="true"></param><param name="allowscriptaccess" value="always"></param><embed src=";hl=fr_FR" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="480" height="385"></embed></object>
  6. carterfx


    First post here.

    I guess it would depend on what portion of your account you've designated as "risk capital". All of my instructors seem to agree on risking no more than 5-10% of your account on any one trade. Risk 50% of your account and lose and you'll then have to double your money on future trades to get back to where you were before that 50% went away. Risk 75%, lose, and the figure jumps to 400% to get back to start.

    I've never risked more than 20% on a single trade. Sure, profits are slower. But losses are manageable. And you'll avoid playing catch-up or getting blown out if your crystal ball has crashed. Money management=long term survival.
  7. 0.05% of portfolio
  8. :
    So often we can read so many times on ET people asking and saying about "risking a loss of max 1% of risk capital per trade."

    However, we still don't know how much (% of risk capital) should be deployed/used in order to attain this objective (max loss 1%).

    imo, there would be an optimal % of risk capital should be deployed/used to control the max loss per trade. But this optimal deployment % seemed seldom discussed, as far as I know. (Actually a kind of hiden operational risk!)

    Basically my understanding (based on previous readings about money managers) has been professional investors don't like their total amount of risk capital in their accounts to be over-deployed nor under-deployed.

    "The vast majority of CTAs trade position sizes with margin requirements of lass than 50 percent of the acount size. Therefore, in most cases, it is not necessary for a managed futures account to be fully funded.- Schwager (Managed Futures - Myths & Truths)"

    That, imo, would be one of the main reasons how managers/investors determine their notional funding of nominal acccount sizes.

    Just my 2 cents as notional (not 20 which is too much)!

    BTW, what is actually a single Trade, and how people individually define it anyway!?
  9. deploy 0.5 % and risk 0.05%
  10. Nice , the same opinion here

    This risking ratio should be very dynamic.
    Actually, i dont like people saying when you risk less you survive more. I like to blow my account very quickly if it is going to blown up anyway at the end. This will only lengthen the period and willnot change the fate. So, let us face it.. if your set up is Ok, risk more so you will gain more and if your set up is less ideal, risk less so you can add in when needed.
    #10     Sep 20, 2010