What is the risk limit you set for a single position in your portfolio?

Discussion in 'Risk Management' started by helpme_please, Aug 5, 2019.

  1. I'm not a short-term trader. Am I right that short-term traders tend to have high hit-rate for their trades? Losing 2% of equity for each losing trade is hard to stomach when there's a string of losses.
    #11     Aug 6, 2019
    murray t turtle likes this.
  2. tomorton


    No more than anybody. Lot of traders have low win rates but high risk:reward ratios, so when they win, they win big. Low win rates in trading are not uncommon if like most traders you just enter/exit on chart features, with no other analysis input.
    #12     Aug 6, 2019
    helpme_please likes this.
  3. Bill O'Neil of IBD fame recommends 8%, maximum for individual security positions.
    #13     Aug 6, 2019
    murray t turtle likes this.
  4. %%
    Less is more, is the right answer, if you want to get it right. If not , get left/LOL .
    Risk $8 to make $24 is a good guIdeline, thanks to IBD founder[ Investors Business Daily; but now its a weekly paper] .
    [Plenty of it is right answers; for example load your boat with shorts/inverse ETFs + never sell; but dont try this @ home.Pardon my sarcasm/blow up remark LOL]

    BUT since most get a paid for home/REALTY...........; not really even risking $8[total].
    And raelly risk less in shorts/inverse ETFs, than longs. A lot of it depends on market; single stocks are much more risky than QQQ, SPY. I use a 50 day moving average more than $8 risk to make $24:caution::caution::caution::caution:, :caution::caution::caution::caution: :cool::cool:
    #14     Aug 6, 2019
  5. Metamega


    Don’t think a hard percent is the right way to approach. You need some volatility/ATR metric. A weed stock moves quite a bit more then a bank stock.

    Personally investing I just average into index ETF’s.

    Another issue is correlation. Most stocks are highly correlated. Some outliers might be utility stocks( dividends in this sector act more like a safe haven), gold miners are highly correlated to gold, oil companies and oil, etc.
    #15     Aug 6, 2019
    murray t turtle likes this.
  6. tomorton


    The % risk figure in trading refers to the account capital risked as a percentage of the total account capital. This is because of leverage impacting position size.

    The % risk figure in investing, where there is normally no leverage, usually refers to % of the individual share's purchase price.
    #16     Aug 6, 2019
    murray t turtle likes this.
  7. Turveyd


    I Day Trade I run 5% risk, but accept a blow through SL sudden unexpected news could go 20% occasionally and 40% rarely.
    #17     Aug 6, 2019
  8. %%
    That's almost all true help me-please;
    eXcept with super trends like some turtles get in, may/should risk >> than 2%, for even a LOW HIT rate % . And for example with SPY........ which would be one position, no matter how many investments you made in it.
    SPY is really better more than many mutual funds, not just in liquidity; most all the best mutual funds risk 98 %or 99% all the time.BUT like IBD[Investors Business Daily[ weekly now LOL] noted ;hold them for 10-20 years.....................................................................
    BUT even on some of the best trades/investments/REALTY; i seldom used no money down- too much risk.10% down , 90% risk.:caution::caution::caution::caution::caution::caution:,:caution::caution::caution::caution::caution::caution:
    #18     Aug 7, 2019
  9. Handle123


    Taken me years to get it where I have positive expantentcy, in theory when I open any trade 30 minutes or longer timeframe using variation of ways to hedge. I do have loses when stock gets stopped out and instead of stock continuing in wrong direction so the hedge gains money to cover lose on the underlying, it stagnant or reverses but this happens seldom. So my drawdowns now are much less than when I first started 41 years ago, rather have much smaller drawdown then concern myself with upside that I have limited control. I consider this to be my "edge".

    Scalping/day trading I consider to be the worst as far as risk, most signals have inverse risk to reward, changes I have made in last year regarding my averaging down on any position including longer term have reduced threats to my accounts by reducing the amount of levels I use to average down, so I stay away from huge daily loses. Indexes due to HFT has changed the game a bit as well, retracements regarding my signals don't retrace as far now was another reason. My risk is not a percentage of account, but based off on using my own margin of $7,000 to trade one lot of Indexes at CME, if I was to have wrong direction in trade and exchanges closed and not reopen for a week, would want to be able to have something left. My risk in signals not changed in 10 years, equity curves goes up, add more size.
    #19     Aug 7, 2019
    murray t turtle likes this.
  10. %%
    Good points;
    CME is not likely @all to be closed for a week. BUT NYSE was closed@ least twice, so i dont blame you for preventing an accident; like my banker dad said ''accidents dont just happen-they are caused''
    Short term trading never gave Me as much profits medium/long term;
    as far as keepin' profits.LOL/true. BUT some short term trading can help my med/long term money; but a surprise rate cut helps limit position size.

    I dont Like huge drawdoWns also now , unless its part of a profit or huge trends supports it partly;
    but 1999+ 2019 in technology seldom happens.I thought QQQ was going to close below 200 day moving average this month- it still could??Maybe not his week; about 19 minutes 'till close.Some[not all] draWdowns can be avoided with common sense; i would not invest/trade a summer rally , like 1st or 4th quarter trends, even if i was fairly sure 2019 would finish like 1999.:cool::cool:,:cool::cool::cool::cool::cool::cool:
    #20     Aug 7, 2019