Sunday, September 24, 2017

Suggested Risk Amount Per Trade

January 4, 2011 by  
Filed under Forex FAQ & Latest Post


In today’s forex faq, I will be going through a question from our fellow traders about the risk amount.

Below is the question

If I use about 40% of my money as a stop and consistently wins 4 trades from 6,is it this a bad strategy, Instead of using only 20%?

I am happy to hear that you are having 4 winning trades from every 6 trades you made. I must say that you are having a good trading strategy on hand.

However I feel uncomfortable about the amount of risk you are exposed to in every trade. Risking 40% of your money per trade is far too high, you just need 3 consecutive losses to wipe you out.

In fact, using 20% per trade is also too high, my personal risk amount is only 2 to 3% per trade. This is to ensure that I am able to continue trading when I met a losing streaks.

To be a successful trader, risk management is very important and can be the key to your success.

Below is another question from another trader.

Being relatively new to Forex I am completely immersed in trying to perfect my routines. Not just of physical trading but also in the way I handle my accounts and how I view them!

My question is, with 6 or 7 demo accounts running and one live account so far what is the best way to handle this efficiently?

I must say that you must be pretty busy as you have to run 6 demo and 1 live account. In fact, you just need 1 demo account and you will be able to perfect your trading skill.

Sometime more is less and this can’t be more true in trading. In trading, you have to maintain your focus a lot and switching from one account to another can be quite a chore at time.

Personally I will suggest that you have 1 demo for fine tuning of strategy and 1 live to trade.

If you have any suggestion to give to our fellow trader, do feel free to give your comment below.

Comments

2 Responses to “Suggested Risk Amount Per Trade”
  1. Dr Julius Ssemakula says:

    Hullo kelvin, god job as usual
    About the percentage to risk, 40% ia way too abnormal and you the fast trader i have heard doing that. Just 2 to 3 losses which can happen because this is forex will run you emotional, i know sometimes the 2-3% that kelvin uses can be so tight because your s/l will be a bit close to your op and you can get stopped early. this normally happens of you have a small account but my suggestion is that you reduce to a small trading volume. Personally i can risk up to 10% and if it requires more i dont trade ans thats ma rule, but i ensure i trail my stop

    About the 6 demos and 1 live account, you are just getting confused. The demo is a demo and you should get emotional with it when you lose. what i mean is that open up a demo with a balance of $100,000 so that you have enough money to practice on different strategies as you journal them down. i have had a total of about 7 demos since i started but i use one at a time for practice and when it runs down i open another and with a different broker. that keeps my focus and not to confuse the live a and demo and also to try out the platforms of different brokers. By the way you may end up opening a crazy trade on you live account thinking that you’re on the demo

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