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

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

  1. 1) Why would you bet when below 50%??? go to a roulette "near you" instead... (and get 49%, YAY !..)
    2) You forgot to mention loss/win ratios... without which the win rate is completely meaningless...

    Acrary post is the best post so far.
     
    #71     Aug 29, 2013
  2. John´s house gets hit by a nuclear bomb while he was trading Gold, heavily long 1000 contracts... Now John will never get to cash the money on his brokerage account...

    Discuss.
     
    #72     Aug 29, 2013
  3. toolazy

    toolazy

    pity. that perfect setup when first time in his life all his 12 indicators aligned on top of inverted HS to buy gold - he'll never enjoy fruits of his TA knowledge.

    :eek:
     
    #73     Aug 29, 2013
  4. toolazy

    toolazy

    that is plain racism against fx traders !

    You think you are better human because playing oil & stock indexes.

    I tell you what. I play them all. And largest wins & best R:R came from FX.
     
    #74     Aug 29, 2013
  5. actually i've already thought of something similar to this and it's all of my monitors and the million pound stand falling over on me...
     
    #75     Aug 29, 2013
  6. Visaria

    Visaria

    You guys jest...but it is a serious issue.

    Maybe you have to experience a black swan event to appreciate it?
     
    #76     Aug 29, 2013
  7. 3-% risk is the most I will take on 1 trade. Seeing figures like 10-20% on 1 trade is crazy. 30-40% is just idiotic.
     
    #77     Sep 20, 2013
  8. 10% on one to make 35+% is fine, though, right?
     
    #78     Sep 20, 2013
  9. bln

    bln

    Impossible to say a generic rule as it is a factor of many different metrics together.

    - Win/Loss ratio, ie. percent of winners.

    - Profit/Loss ratio, winner to loser size.

    - Frequency of trades. ex. a strategy that make 1000 trades in a year or one that make 10 trades in a year.

    - Serial or parallel positions, a strategy that opens and closes each trade before the next or one that got 10 trades simultaneously open.
     
    #79     Oct 1, 2013
  10. But still you must employ an upper limit, like 2% - 5% max regardless.
     
    #80     Oct 5, 2013