The Unmentioned Risk of Trading Too Small

Discussion in 'Risk Management' started by Stockie, Nov 5, 2013.

How much do you risk per trade (approximately)?

  1. less than 1%

    5 vote(s)
    12.5%
  2. 1%

    9 vote(s)
    22.5%
  3. 2%

    8 vote(s)
    20.0%
  4. 5%

    4 vote(s)
    10.0%
  5. more than 5%

    14 vote(s)
    35.0%
  1. Stockie

    Stockie

    Thanks, ES on my screen. I see.
     
    #21     Nov 8, 2013


  2. That one.If you could try it and see if my intuition is right or wrong. :)
     
    #22     Nov 8, 2013
  3. Visaria

    Visaria

    :confused:
     
    #23     Nov 8, 2013
  4. Stockie

    Stockie

    You said go figure. You post in the ES journal, which gave me an idea of the types of setups you trade and hence the reason for your 100%+ years with 0.5% risk.
     
    #24     Nov 8, 2013
  5.  
    #25     Nov 8, 2013
  6. Its wrong.
     
    #26     Nov 8, 2013
  7. Since you said it is wrong, that means it is right.

    PS: I know it should be right because maths do not lie.
     
    #27     Nov 9, 2013
  8. Sergio77

    Sergio77

    It is because you assume that win rate is a stationary random variable. But if for a few months it drops to 0.2 before it goes up to 0.8 for average of 0.5 2% may drive you broke and 0.5% may not.
     
    #28     Nov 10, 2013
  9. Visaria

    Visaria

    LOL, I also post in the CL thread, but actually i trade many different markets and time frames.

    The point was really to say that even with a relatively small amount of risk like half a percent, you can make a lot of money over enough trades (assuming you have an edge).
     
    #29     Nov 10, 2013
  10. Stockie

    Stockie

    Jack,

    A bang for buck response, critical but fair and may even have been enlightening.

    I accept your criticism about technical targets. It's like going to the beach after learning the weather forecast, which predicts rain at 3 pm. At 3 pm there isn't a cloud in sight, yet I leave anyway.
     
    #30     Nov 10, 2013