Am I trading too risky?

Quote from peilthetraveler:

The other day i was on a forex site looking for a new broker and I saw this option of managed accounts and i could click the link to see the past returns. I was surprised to see the returns of only about 12-17% per year. When looking at the monthly returns I see around .5 to 2% or so per month returns.

Now I thought I was being somewhat conservative in my trading with my leverage , but my swings are so much higher than what these guys are making. Last month I returned about 55%. On any given day my account will go up or down as much as 10%. Is this the same with the rest of you guys? Or do you guys shoot for smaller returns like 2% per month like managed accounts?
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If you want to risk 2% of your account per trade:

RISK = 0.02 * ACCOUNT BALANCE

RISK = STOP LOSS * POSITION SIZE

Set your STOP LOSS and calculate your POSITION SIZE

or

Set your POSITION SIZE and calculate your STOP LOSS.
 
Quote from davidmaria1:

Checked my leverage. 20:1
I trade $/pip value anyway.
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Mine's set at 50:1 but like you say it's all about $/pip value not how much margin one uses, it could just as easily be 500:1 for all the difference it makes!
 
Quote from TheRumpledOne:

RISK = STOP LOSS * POSITION SIZE

Set your STOP LOSS and calculate your POSITION SIZE

or

Set your POSITION SIZE and calculate your STOP LOSS.
More...

Huh :confused:


Try...

(Equity x Risk %) / Stop Loss = $ value per pip = trade size.

Example for EUR/USD:

($10,000 Equity x 1% Risk) / 40 pips Stop Loss = $2.50 value per pip = 25k trade size.
 
take your last 300-500 trades and convert them to a ratio of your + or - divided by your initial risk. (so, if you made 200 points and risked 100 you would have a +2.00.) list them down column a beginning row 2. in b1 place a %; in c1 place a beginning account value. then use column b to multiply the % by the account value by the ration outcome. adjust the account value by that number. repeat.

by changing the % you can see your return curve vs. various levels of risk. you will see the returns increase dramatically, level off, begin to decrease, and will eventually even take a positive edge negative should you risk enough. you can approx your optimal risk and better yet a point to its left at which the curve begins to plateau. as an individual trader i can see no reason to trade smaller than this or near this level.

set standard of living upside markers for yourself and take $$ out of the account once they are achieved. you may wish to start your trading with an active and inactive portion to bolster the account should you start with a large dd.

ssb
 
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