Quote from spreadem:
So if you risk 2% per trade and you have 10 trades on at the same time aren't you risking 20% of your account?
Many traders won't admit to taking a lot of risk per trade, but when you add up all the risks by accumulated trading then you'll find that they're taking more risk than first thought.
What about when a trader risks 2% per trade, 25 times per day? I mean buy then sell, buy again then sell again, and over and over again 25 times in a single day. Didn't that trader risk 2% of the account 25 times that day for a total of 50% risk?
So it would make since to think that if a daytrader risks 2% per trade; and trades in and out of the market 25 times; that trader is taking a 50% account risk ... per day!
Situation -
You find a good system - win/loss ratio of 80%, etc - but after trading live, you get 3 straight losers, do you give up and look for another system or keep going?
Losing 20 straight trades in a row (the risk) is a remote possiblity even if the system you're following has a win/loss ratio of 80%. Up to how many trades will you do before giving up on the system? I dont think a single trade will make or break a system, so the total risk for a series of trades should be considered instead of just the risk for a single trade.
pretzel