POLL: % of account risked on a single trade

It would depend on the risk and reward of any trade and the probabilities associated with the risk reward outcomes. You shouldn't determine risk until you assess the probaility of the risk, the reward and the probability of the reward.

At the same time, only risk what will not screw you up if you lose it. If you were hit with the one in a million loss and you were psychologically screwed up then it wasn't appropriate.
 
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! :cool:
 
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...


There are other factors that can effect the equity curve. By knowing what the ET community average is..... one must ask other questions of the poll contributors to get an accurate knowledge of the consensus.

Michael B.
 
What about extremely low risk/very high win rate systems? Some arbitrage strategies have a virtually 100% win rate if executed properly.
 
depends on what you are trading. if you are a swing trader trading a non leveraged stock like spy you could go 100% and not get into trouble because its diversified.
 
Not really. Unless the covariance of the outcomes of each trade is exactly +1.


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! :cool:
More...
 
To be more precise,

largest single trader loss on a position is $12,500;

largest multiple trader loss on similar positions is $30,000;

largest daily firm wide net loss $15,000;

number of net loss firm wide days annually is 3;

number of gross loss firm wide days is never.

Wouldn't want to be accused of being too concise ...
 
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