How much should you risk?

15% of an account is at risk. The trade is a short position on the ESU16. I expect to hold it for weeks unless of course i am stopped out this week.

I may increase or decrease the position, trade around it or trade other instruments too.

I'll risk from anywhere between 0.1% of my account to 50% on a trade.

I would still like to know why bublu thinks only 1%-2% should be risked on a trade (obviously he is wrong). He needs to read the 1st 9 pages of this thread.
 
Visaria said:
15% of an account is at risk. The trade is a short position on the ESU16. I expect to hold it for weeks unless of course i am stopped out this week.

I may increase or decrease the position, trade around it or trade other instruments too.

I'll risk from anywhere between 0.1% of my account to 50% on a trade.

I would still like to know why bublu thinks only 1%-2% should be risked on a trade (obviously he is wrong). He needs to read the 1st 9 pages of this thread.
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The first 9 pages of this thread are about a theoretical situation where the distribution of returns are known exactly (as they would be in a casino); and are also quite high compared to what is normally available in the market.

(The Sharpe ratio of the OP is 1.44 per trade, or if you're doing this thing every month as you would be doing, 5.0 a year. Naturally Sharpe Ratio is a bad measure to use with such a non linear payoff, but that isn't relevant to this discussion)

15% is extremely high in the situation you describe (even 1 -2% might be too high in other situations).

15% risked over a month means your annualised risk is around 52%. Hedge funds usually run at a quarter of that. You say you have other positions on; well if you have 4 positions at 15% risk for a month each, then you're coming in at 208% annualised volatility. Using the normal "half kelly" rule of thumb that means you'd need to have a sharpe ratio of twice that; about 4.2.

This is unrealistically high (see http://edge-fund.com/Lo02.pdf table 4)

In summary I don't think it's obvious that bublu is wrong, and personally if I was you I'd be thinking about scaling my risk back substantially.

GAT
 
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Visaria said:
Really? Explain.

I'm risking 15% on a trade atm.
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I think each trader will have own preferable to spent the risk in every single plan, some trader might they trade without stop loss level but cut loss manually, but will focus on the chart if likely on certain point he must cut loss hence will done
 
It's not likely that i will be putting on other 15% risk trades whilst i have this trade on. Other trades that might be put on might have negative correlation which would reduce the risk of the short emini trade.

I'm running this off a very small account that i manage (i have other accounts).

Thanks for your post btw, well thought out.
 
Risk, How much should we risk, too often times not much time to ask about "Open profits", too many times it is all about initial risk. And when something is talked about a great deal like a news event, most do nothing like a deer in headlites, often saying "what will be will be". So little of hedging Open profits ever spoke about and when done, most will say it is money thrown away or comments like you can't time the markets. And when so many of my acquaintances tell me I am wrong, I know I am right. Whether it is Brexit or President election, you have to buy the rumor and hedge the truth.
 
I am ever reading certain advise from trader if better use tight risk management to making more opportunities, but sometime as trader dare to trade with high risk taker, because their strategy forced to use more free margin
 
On brexiut certain trader he made very huge profit, he can made around 1.3000.000$ but on discussion still not yet these trader giving answer whether profit will paid or not by broker
 
It seems to me that ideal risk is 10-15%, not more. When talking about big money, that it's 4-5%.
As they say, the quieter you go, the further you'll get. That's absolutely true. :)

As for brexit, you can be right, but there is a chance you'll meet losses too. Not everyone win such risky trades. Unfortunatelly.
 
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