POLL: % of account risked on a single trade

C

candletrader

I thought it would be interesting to get a feel for average levels of risk assumed per trade (in terms of % of account) amongst the ET community...

For example, if you have an account of $100,000, how much of that would you be prepared to lose on a single trade? The conventional yardstick that we all hear about and read about is 2% ($2000 risk in this context)... but some traders don't mind a much more volatile equity curve (e.g. Livermore) and will risk a pretty high % of their account on a single trade.... others may view even 2% as on the high side, and may opt for a risk of 0.25% to 0.5%... the latter category of people will have a much smoother equity curve...

So do you prefer a smoother, less volatile equity curve versus a potentially higher but more volatile equity curve?

[ P.S. for highly leveraged instruments such as futures, your account will obviously not be fully-funded to the value of the underlying, so replace "% of account" by "% of reserves of capital allocated to trading, irrespective of whether that capital is actually in the trading account"... ]
 
I am seeing a few 5%'s.... just to clarify things, I am not asking you how much money you are prepared to place on a single trade as a % of your account... I am asking you how much money you are prepared to lose on a single trade as a % of you account...
 
It strikes me that the people voting for option 4 are either outstandingly consistent enough to warrant risking that much (and my hat goes off to such traders) or they are simply fools, setting themselves up for probable imminent trading failure, as a result of the fatal drawdowns that will, in all likelihood, ensue...
 
All depends on the system, some allow a very quick move to BE after an initial relative large stop. Others lose so many times that you better have your risk in check.

Just because some book says to only risk 1 or 2% doesn't necessarily mean they are correct.

You set your stops relative to technical levels, and with a highly accurate, high percentage system .. there's no fault in being at the largest when you are right, despite risk.

 
Quote from prox:

All depends on the system, some allow a very quick move to BE after an initial relative large stop. Others lose so many times that you better have your risk in check.

Just because some book says to only risk 1 or 2% doesn't necessarily mean they are correct.

You set your stops relative to technical levels, and with a highly accurate, high percentage system .. there's no fault in being at the largest when you are right, despite risk.
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I am talking about maximum predetermined risk % levels, not the dynamics (be they discretionary or systemized) leading to where specifically a given stop is taken on a particular occasion... the words "upto" and "beyond" in the poll take care of differential levels of stops which are actually taken... the poll is focused on the context in which these differential stops are taken i.e. in the context of a predetermined maximum risk % level... simply put, the poll asks you: on a given trade, what % of your account is the absolute maximum that you are willing to see eaten by a stop loss?....
 
Quote from prox:


You set your stops relative to technical levels, and with a highly accurate, high percentage system .. there's no fault in being at the largest when you are right, despite risk.
More...

An implicit assumption in the poll is that positions are sized on a % risk basis... sensible position sizing would obviously take into account things like the various technical phenomena.... moreover, the poll refers to risk %, as opposed to absolute levels of $ risk, points or cents etc...
 
What if I told you about a system that risked 3 ES points to get 1 ES point (avg win ratio 0.33:1)and won 83% of the time. P/L ratio=1.60:1.

My point is that by applying trade management by increasing and decreasing bet size can skew results and turn the above upside down number into a winning system.

Test this....put it in a spreadsheet find out where your system enters and keep a trade log with max and min excursion...and you too can play the numbers game.

Here is a tool:

http://www.hquotes.com/tradehard/simulator.html


Michael B.
 
quote from candletrader :

I thought it would be interesting to get a feel for average levels of risk assumed per trade (in terms of % of account) amongst the ET community...
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This part of a trading system is more important than entry points, exit points, system optimization, indicators used, datafeed or trading software used. IMO.
 
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