Up to 0.5% per entry, and upto 1% per instrument when reverse pyramiding i.e. 0.5%, 0.25%, 0.25% No fixed target but 2:1 is my minimum desired. But depends on price action and I may take 1R under certain conditions.
I have read on the issue of money management and my synthesis is an allocation of maximum of 2% of funds on any one trade and i risk up to 8% of each of these 2% trades. On a $1m capital base this would mean a maximum trade size of $20,000 and a risk of $1600 per trade. Obviously this is driven by the size of upside opportunity but this rule of thumb has protected me from the extreme downsides and allowed me to stay in the game and outperform my own benchmarks. Van Tharp is the best writer IMHO on position sizing. Best Arb
0% or 100% are two optimal solutions from probability theory. Any other suggestion is a waste of time to read and think about.
In an idea world you should not risk more than 5% on any given trade and really 1% to 2%. Here is the problem, most people are trading accounts way too small. If your trading a 20K account and want to trade even one e-mini how can you use a reasonable percent risk. If you filter out that many trades , the ones you take need to be tested to make sure that these low risk trades are even profitable.
In the real world of trading, most traders money management involving their trades is similar to how they manage their finances in their personal lives regardless to what it should be. Yeah, that's bad but that's the reality of the situation. I say this after having an interesting conversation with different types of traders involving the % of their income (those with other jobs) that's being used to pay their mortgage, rent or debt. My point is that there's an idea number out there but most aren't going to follow it just like they're unable to do such in their personal lives. Old habits are hard to break. Mark
At last someone spoke out in a logical way. Kelly and optimal-f are for gamblers who set aside a small amount either to make a killing or lose it all. These methods are not for professional traders who want to make a living or money managers with OPM. There is also some good discussion in the thread below but I think the person who came up with optimal-f has pulled out, at least for now, in the face of evidence that its use is unrealistic since one must know largest future loss http://www.elitetrader.com/vb/showthread.php?s=&threadid=206251
Between 0.5-2% on each trade. Depends on your risk profile and what sort of returns/drawdowns you are seeking.