You probably need to distinguish between anticipated risk (i.e. the % amount of the trader's equity that he is willing to lose before closing the position) versus the potential risk (i.e. if the position gaps past the pre-determined stop loss point). Based on some posts seen on this board previously, although some traders set out to risk less than 5% on individual trades, the potential loss they stand to make is sometimes more than 100% of their account.
See Larry Williams's Chapter 13 of his book "Long-Term Secrets to Short-Term Trading", titled "Money Management the Keys to the Kingdom".
Depends how you define risk...for example w/ the dummy trades I do, I have a tight stop loss in play so usually less than 1%.
I probably risk less than most traders with my new Retail Spot Forex system. Many of my collegues have complained that I am too conservative. But I think the answer is, what is most comfortable for you. Only YOU can make an educated decision and only after some experience with failing and blowing up to drive the discipline home. Michael B.
Why? Would risk 2% really put you at risk of ruin?My guess is not, so why not risk a little more, it might be more unconfortable yet on the end of the year you will bank more cash. If you trade OPM, then thats a argument. My guess is that you hold a portifolio with 1.5% max risk on each position and your total risk is higher
It depends how big your account is... If he has a $500,000 account then losing 2% wouldn't be fun...now someone with a $25,000 account is wouldn't be as bad.