How to risk more money? Problems with risking more

A

agent54

I currently have a $15000 account, I'm a student. Currently I risk less than 1%, about $15 per trade. If I risk 1% that's 150/trade. Which is still quite a lot to me because I'm still a student.

The problem is that even though 1% is a good risk amount, I can't bear to lose $150. I am ok with $15 though, which is what I am currently risking per trade (0.15%). Even if I have a 1M account, i probably wont risk 1%/$1000, and not even $500, probably $100 max.

Will this change when I start working? Ideally I'd like to risk 1%.
 
They say not to risk more than 2% per trade. Risking just 1% if you are a newbie trader makes sense. It will allow you to figure out the stockmarket and how best to trade it while, risking only a small amount per trade. You will avoid blowing up your account which a lot of newbie traders do because they want to be overnight millionaires risking huge amounts of their capital in one trade. Having proper risk management and position sizing is the first step in becoming a very good trader. You reduce the fear of losses and you could have 5 losing trades, all at once. At 1%, you would have lost only 5% of your capital and that is on a worst case scenario. Still, you have enough capital to comeback from those small losses.
 
Instead of thinking about increasing risk per trade, how about thinking whether your system has positive expectancy and robust? If your system doesn't have positive expectancy and not robust, increasing risk per trade will only accelerate your system drawdown.
 
agent54 said:
I currently have a $15000 account, I'm a student. Currently I risk less than 1%, about $15 per trade. If I risk 1% that's 150/trade. Which is still quite a lot to me because I'm still a student.

The problem is that even though 1% is a good risk amount, I can't bear to lose $150. I am ok with $15 though, which is what I am currently risking per trade (0.15%). Even if I have a 1M account, i probably wont risk 1%/$1000, and not even $500, probably $100 max.

Will this change when I start working? Ideally I'd like to risk 1%.
More...

Why do you want to risk 1% per trade? Who says that is a good amount? Perhaps it's too much, perhaps it isn't enough...who knows?

In case you are still in trial and error phase, you risk as little money as possible without making it IDGAF - risk. In other words, it should still hurt you and the trade should still make sense in an economical way.

There is no reason to buy one share of FB since you probably don't even cover commissions even when you're right.

As soon as you figured out how you will trade in the future, you have to calculate your risk figures from your past trades. But make sure your risk is high enough.

I remember one saying from a former colleague of mine:
"When you see a good trade load up so much that you puke on your shoes and then trade out of one contract"

TL;DR: Forget the 1% rule...it's bullshit. When you suck, risk as little as possible. When you have edge, risk as much as possible without risking your account.
 
agent54 said:
I currently have a $15000 account, I'm a student. Currently I risk less than 1%, about $15 per trade. If I risk 1% that's 150/trade. Which is still quite a lot to me because I'm still a student.

The problem is that even though 1% is a good risk amount, I can't bear to lose $150. I am ok with $15 though, which is what I am currently risking per trade (0.15%). Even if I have a 1M account, i probably wont risk 1%/$1000, and not even $500, probably $100 max.

Will this change when I start working? Ideally I'd like to risk 1%.
More...
Hopefully you have no commission.

What do you expect to make on winning trades?

What is your expectancy. If it is positive then risk 1%. If it is negative then quit trading.
 
agent54 said:
I currently have a $15000 account, I'm a student. Currently I risk less than 1%, about $15 per trade. If I risk 1% that's 150/trade. Which is still quite a lot to me because I'm still a student.

The problem is that even though 1% is a good risk amount, I can't bear to lose $150. I am ok with $15 though, which is what I am currently risking per trade (0.15%). Even if I have a 1M account, i probably wont risk 1%/$1000, and not even $500, probably $100 max.

Will this change when I start working? Ideally I'd like to risk 1%.
More...

Yes, it will change as your net worth increases.
Today, you are thinking of 100$ as hell lot of Mr Nuddles packages, when you start making few thousands a month that will become a difference between TV channels per month or your cell phone plan choice. Then a 1000$ as a difference between painting that scratch on your new car or not. At some point you will see 10k loss as just one month salary, not the end of the world.

I'm decades into my career and +/-10,000$ is just a normal daily noise in my trading account. I know a trader who wouldn't bother too look at his positions unless his account is down 50k in a single day.

Like others mentioned, don't focus on how much common wisdoms says you need to risk, focus on refining your strategy and making more money outside of trading.
 
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Split the account into 10, ie $1500, or maybe even 20.

Then risk a fixed 1% of the account on each trade. So if/when the $1500 grows to $1600 the risk per trade now becomes $16. Keep going till you triple the account. Then re-evaulate.

The above will work beautifully, assuming 2 things, 1) your game plan is sound, and 2) you do a lot of trades, in the 3-5+ per day, aka short term trading. If however, you do 1-2 trades a week then it won't work because the compounding effect won't kick in.

Basically compound using ultra small amounts while protecting your main stash.
 
You've got to risk it to make it, worry more about the time your wasting, you don't get that back playing for peanuts when you could be playing for Ferrari's :)

But only if your profitable at 0.1% $15 ofcourse, if not stick to that or demo till you be.
 
agent54 said:
I currently have a $15000 account, I'm a student. Currently I risk less than 1%, about $15 per trade. If I risk 1% that's 150/trade. Which is still quite a lot to me because I'm still a student.

The problem is that even though 1% is a good risk amount, I can't bear to lose $150. I am ok with $15 though, which is what I am currently risking per trade (0.15%). Even if I have a 1M account, i probably wont risk 1%/$1000, and not even $500, probably $100 max.

Will this change when I start working? Ideally I'd like to risk 1%.
More...

My friend, beginning traders (and traders in general) who worry about risk first are EXTREMELY rare, so I must say you are off to a very good start! :thumbsup:

And yes, risking 1 or 2% on each trade is a sound money management rule, in most cases.
 
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When you start working will you have time? Your risk tolerance is too low, not sure if you are day trading or swing trading but either way you need to open up your draw down or else you'll statistically lose out on large positive swings. Your account is probably a lot of cash most of the time, you should probably look into buying quality businesses at a reasonable price with fair dividends as part of your portfolio and learn options to take advantage of volatility and income opportunities.
 
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