1468 23 75

Above is an important illustration that will outline the difference between risking 2% of your capital per trade compared to risking 6%.

If you happened to go through a 10 trade losing streak, you would have gone from starting with £20,000 to having only £11,459 left if you risked 6% on each trade.
After 10 losing trades you would have lost over 40% of your account.

If you were more conservative and risked only 2% of your account per trade, you would still had £16,674 which is only a 17% loss of your total capital.

- 10 trades at 6% per trade would mean a 75% increase is required to get back to breakeven.

- 10 trades at 2% per trade would mean a 20% increase is required to get back to breakeven.

The point of this illustration is that you want to setup your risk management rules so that when you do have a drawdown period, you will still have enough capital to stay in the game.

Trade Safe.
Comment: I personally trade 1% per position, however this is a great illustration of basic risk management that should be implement prior to any live account trading.
Could u explain why u use 1% per position?
+1 Reply
@McKuz, No problem at all.
Good Point, thanks
+1 Reply
TomHall hasanzad
@hasanzad, My pleasure.
What do You think about keeping constant risk over multiple trades? Let's say You calculate 2% from Your entry level and stick to it via 6 trades.
When You calculate % risk each time You will not have positive outcome from 3 loses at begging and 3 winners on end, when Your risk/reward is 1:1
TomHall rafal_w

This is true, however it depends on how your plan is set.
For example at target 1 would you take off half of your position and let the remaining run?

Again it would all depends on what kind of strategy you are using, is it harmonic patterns or structure support?
If you are trading harmonic patterns you usually get 1.5:1 if not more depending on how deep the patterns complete on the Fibonacci.
If you are trading support and resistance most trades give a better than a 1:1 risk reward ratio.
Many traders make the mistake of letting there losing trades run and cut there winning trades short, try not to be greedy but squeeze the pips out of the winning trades and cut the losing trades short.
Very valuable info Tom, many thanks for sharing.
+1 Reply
TomHall HEmmanuel
Thank you.
Thanks Tom, always important to be aware of :-)
+1 Reply
EN English
EN English (UK)
EN English (IN)
DE Deutsch
FR Français
ES Español
IT Italiano
PL Polski
SV Svenska
TR Türkçe
RU Русский
PT Português
ID Bahasa Indonesia
MS Bahasa Melayu
TH ภาษาไทย
VI Tiếng Việt
JA 日本語
KO 한국어
ZH 简体中文
ZH 繁體中文
AR العربية
Home Stock Screener Forex Screener Crypto Screener Economic Calendar How It Works Chart Features House Rules Moderators Website & Broker Solutions Widgets Stock Charting Library Feature Request Blog & News FAQ Help & Wiki Twitter
Profile Profile Settings Account and Billing My Support Tickets Contact Support Ideas Published Followers Following Private Messages Chat Sign Out