expain simple risk/compound

Two pretty simple questions:

when we talk about 3% risk...does it mean that we putting a stop loss of 3%..
eg: have $100..I enter a trade with a stop loss of $3.00 (risk)...

Let say we make $5.00..now I have $105.00

how do I compound this..by adding to $ my position???

I know that the numbers are very small..
is the concept right????

thanks

If i understand you properly then now that you have $105 in your account, if you want to consistently risk 3%, then you would now risk $3.15 per trade. Likewise if your account went down to $50,, @ 3% risk per trade, you would now be risking $1.50 each trade. The beauty is that as your account grows, even though you keep risk at 3%, the actual dollar amount you risk grows, which also enables you to make larger profits. and if your account is in drawdown, the actual amount risked will be lower, to help preserve your capital, a biggie!

I like the concept of fixed ratio money management.

Let’s say you have $1000.00 dollars in your account.

You choose to trade 3% of your account.

Conservative traders will trade %1 and ultra aggressive will trade up to 8%.

3% of $1000.00 is $30.00 dollars.

The system I use has a 15 pip stop.

30/15 = 2 micropips or $2/pip

At the start of each month I use the above calculation to determine my risk.

If the account falls below my comfort level… it’s back to trading smaller pips.

A lot of retail traders… that’s you… use similar systems.