Risk Management: Stock
- Thread starter .sigma
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You should always have target of what you can lose. You can allocate 1 to 3 percent of total account risk to all positions. The bigger the account, the lower the risk applied for me.
Okay but do you bend rules? For example lets say a set up occurs and you a very confident in your assertion/bias on a trade, do you then allocate a higher percentage to this trade because of your confidence? I know its bad when you think you know something but I know you understand what I generally mean.
Play around with Kelly Formula and see if you can live with the volatility..
If nothing else you will gain a bit of insight on what you should theoretically wager
If nothing else you will gain a bit of insight on what you should theoretically wager
Depending on account size. Account of over a million dollar, I will not risk more than 5% if i seem too over sure and want to go for all, account of 100k and 500k, I have risked max 10% on both, and it was a good pay as I made over 37%.
Professional traders that make a living at it typically risk no more than 1% on most of their trades, on a few fat pitch trades they will go up to 2%.
Edward Thorp is a math legend that beat the casino's playing blackjack and went on to a legendary trader. He states that betting more than 2% on trades puts you on a certain road to ruin, saying it's only a matter of time.
The 1-2% risk per trade is the one thing that virtually every pro trader that has any awareness on risk mgmt all agree with. Pro gamblers follow this as well, in fact this is where it originally came from.
Edward Thorp is a math legend that beat the casino's playing blackjack and went on to a legendary trader. He states that betting more than 2% on trades puts you on a certain road to ruin, saying it's only a matter of time.
The 1-2% risk per trade is the one thing that virtually every pro trader that has any awareness on risk mgmt all agree with. Pro gamblers follow this as well, in fact this is where it originally came from.
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I would leave half cash and allocate trades on the 5k
Learn to hedge till you get risk down to zero, but that is unrealistic, there are times you lose in the underlying and market then turns around and lose on options too. But overall, never risk more than 0.50% of account. To have any percentage of trade being profitable before putting trade on is insane, no one can tell the future 100%.
10k account too small to diversify, find a tech that has options, but thoroughly develop entry and risk management, know what you need to do before problems happen.
Yes, trade 5k.
10k account too small to diversify, find a tech that has options, but thoroughly develop entry and risk management, know what you need to do before problems happen.
Yes, trade 5k.
Ed Thorp preached trading fractional Kelly. For most of us, assuming positive expectancy, that => ~1% - 2% each bet (trade).