How much shold one risk in a single trade?
- Thread starter epetrov
- Start date
So you people that risk less than 1% in a single trade, does that mean that you are consistantly in 100-200 positions to maximize your account. And if so, how do you pick your stocks? Are you just throwing darts at a newspaper, letting the losers hit the stops and the winners run all day?
It all depends on the volatility of what you are trading. No great revealation here that you make (and lose) your most money when you are at your highest exposure of 100%. I have a seven figure account and will go to 100% in increments if there is trend persistency with little to no volatility. But I can only do that in the open end bond funds (primarily junk bonds) because they are so trend persistent once they get running and when the trend does change it is with very little volatility.
Small enough that your emotions won't interfere with the mechanical efficiency of your trading system - emotions can be arbitrary and impulsive.
Large enough so that after everybody gets their respective piece of your hide there remains a satisfying jingle in your pocket and a contented sleep at night.
Large enough so that after everybody gets their respective piece of your hide there remains a satisfying jingle in your pocket and a contented sleep at night.
No because that implies you are riding every position down to 0 if you are wrong. Also, if you have 100 stock positions then you are 100% long stocks and your risk is more like 10%+, not 1%.
As an example, let's say you go long ES and have a 50 point stop, approx 5% of the face value of the contract. If you risk 1% on the trade, then your net exposure is 20% long.