So I was running through some montecarlo simulations, using different levels of risk. Most people recommend 1-2% equity risk per trade, which is fine. But is anyone trading above these values? I checked a trading system with 2,500 theoretical trades at 5% risk, 50% win rate, 1.25-to-1 reward-to-risk, and the numbers are mind-boggling ($10,000 starting equity turned into $1b equity).
Of course, at higher risk, your drawdowns are going to be greater. At 5% risk, I saw drawdowns up to 70% or above. I'm unsure whether humans can bear such losses.
Thoughts?
Of course, at higher risk, your drawdowns are going to be greater. At 5% risk, I saw drawdowns up to 70% or above. I'm unsure whether humans can bear such losses.
Thoughts?