Experienced traders: How much to risk per trade?

i was hoping a few seasoned trading veterans could help me out. i have backtested and forward tested a very robust trading system. it yields about a 50% win rate with 2:1 reward:risk ratio. i have tested a large sample size and using a 2% per trade risk, have only endured a 6% draw down.

i feel i am not maximizing my performace by only risking 2% per trade. as a matter of fact a "risk of ruin/kelly value" trading calculator (see link) says i should be risking much more:

http://www.60minutetrader.com/calculator.php

the issue i have is, even though my trade management is completely mechanical, my entry is somewhat discretionary. i don't want to have such large risk that i am emotionally unable to pull the trigger. any thoughts and feedback by experienced traders would be appreciated.

I think you have the start of your answer right there. Everything looks great on paper, but doing things for real is usually a different story. Kind of like how the best laid military plans look great on paper but go to hell at first contact with the enemy.

Just because your system could trade at 4% or higher doesn't mean you can. Possibly with lots of time trading it you could get up to that level, but you need to start at a lower rate and then get your emotions under control. Many people find that they have limits as to how much they can deal with. For example, some guys can trade just fine with a 200k account and the draw-downs they incur, but can't do it with a million dollar account because even though the percentages may remain the same, the dollar figures are much higher.

Why not just trade the system at 1.5 - 2% per trade and then slowly crank it up by .25 points. Set goals, such as 50 trades at 2%, then move up to 2.25 and do 50 more trades, then up to 2.5, etc. I think the key for most of us is a gradual increase, not large ones.

thanks for the very thoughtful answer! that's actually a great idea...a graduated increase will help with emotions and allow me to make sure the performance will be maintained, too...for the life of me, i don't why you're called dopey...lol

You're welcome. It's my parents' fault, they both worked for Disney.

Absolutely agree.

Along the same lines how about increasing account size gradually instead of risk, ie setting risk to what you think it should be but on a smaller account. Although the bottom line would probably be the same it would test the strategy and may highlight some (psychological) flaws in risking that percentage of equity per trade.

if you want to risk 4%.... do it in several trades of 0.5% you can adapt to the market then and take more or less risk according to the next days price action