There's some information missing to give a well-founded answer - for example, what kind of returns your strategy generates.
If, for example, it's a day trading strategy and you clip 50% almost every week, then 20% is ok. If, on the other hand, you trade off a 4 hour chart and do a handful trades a month for 30% return in a year, then, clearly, 20% is unacceptable.
So the question should be, which is a personal one, how much drawdown you would tolerate for the return your strategy generates.
Further, there is absolutely no evidence-based rule saying that one should risk 1-2% per trade - it could be more or it could be less, depending on the properties of the strategy.
To find the proper betsize, which will tell you how much to bet per trade to get your desired risk/return profile, the thing to do is to calculate your return to drawdown ratio (or Sortino or similar ratio), and based on that calculate the appropriate position size. That calculation will also tell you how much capital you need to generate the income you expect.
If, for example, it's a day trading strategy and you clip 50% almost every week, then 20% is ok. If, on the other hand, you trade off a 4 hour chart and do a handful trades a month for 30% return in a year, then, clearly, 20% is unacceptable.
So the question should be, which is a personal one, how much drawdown you would tolerate for the return your strategy generates.
Further, there is absolutely no evidence-based rule saying that one should risk 1-2% per trade - it could be more or it could be less, depending on the properties of the strategy.
To find the proper betsize, which will tell you how much to bet per trade to get your desired risk/return profile, the thing to do is to calculate your return to drawdown ratio (or Sortino or similar ratio), and based on that calculate the appropriate position size. That calculation will also tell you how much capital you need to generate the income you expect.
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