How many losses can I sustain? | Forex Factory

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How many losses can I sustain?

  • #1
  • First Post: Mar 20, 2010 3:10am Mar 20, 2010 3:10am
Hi All,

Does anyone know of a calculator/tool which will tell me how many consecutive losses my account could handle if I risk a certain percentage each trade? I know how to work this out manually, but f@#* me Olive, it takes me most of the day as my maths is CRAP!

So for example, I have a $10,000 account and risk 1% per trade (so a smaller $$ amount after every losing trade). How many losses does it take before I am at zero?

Again, I know how to work all this out on pencil and paper, but I'm playing about with something and would like to be able to get quick answers to varying % risks to be able to see for instance how many losses it will take to lose 20% or 30% of an overall account equity when I alter the risk %.

Any help would be greatly appreciated.
  • #2
  • Mar 20, 2010 8:05am Mar 20, 2010 8:05am
Quoting flotsom
So for example, I have a $10,000 account and risk 1% per trade (so a smaller $$ amount after every losing trade). How many losses does it take before I am at zero?

Your account will never reach zero if you lose 1% even infinite times.
  • #3
  • Mar 20, 2010 8:44am Mar 20, 2010 8:44am
Quoting TJPLD
Your account will never reach zero if you lose 1% even infinite times.
Lol, there's always one!

OK, forget the getting to zero part. Can anyone help with the tool/calculator regarding the general issue?

Thanks
  • #4
  • Mar 20, 2010 12:30pm Mar 20, 2010 12:30pm
Quoting flotsom
Hi All,

Does anyone know of a calculator/tool which will tell me how many consecutive losses my account could handle if I risk a certain percentage each trade? I know how to work this out manually, but f@#* me Olive, it takes me most of the day as my maths is CRAP!

So for example, I have a $10,000 account and risk 1% per trade (so a smaller $$ amount after every losing trade). How many losses does it take before I am at zero?

Again, I know how to work all this out on pencil and paper, but I'm playing about with something and would like to be...
check out this link some very good calculators for free.skip the ad.

calculators

hope this help a bit.
sho
  • #5
  • Mar 21, 2010 2:10am Mar 21, 2010 2:10am
A bit over 687 times, before you are unable to continue trading.
  • #6
  • Mar 21, 2010 8:48am Mar 21, 2010 8:48am
Quoting HarryTomdick
A bit over 687 times, before you are unable to continue trading.
If you have 687 losses in a row, you should quit.
  • #7
  • Mar 21, 2010 8:52am Mar 21, 2010 8:52am
Quoting FXTradeX6
If you have 687 losses in a row, you should quit.
LOL, good one!


@flotsom - I've got to ask, why do you want to know this calculation, what ya got planned?
  • #8
  • Mar 21, 2010 10:01am Mar 21, 2010 10:01am
Quoting pipmutt
I've got to ask, why do you want to know this calculation, what ya got planned?
It's nothing spectacular. I have two trading accounts. One for sensible business and the other for experimenting with different high risk strategies.

On my sensible business account (my big one that I make my sustainable living from) I never risk more than 1% of my available equity on any given trade, and I know the way I trade this, it's virtually impossible for me to ever damage my account.

On the other hand I have a separate high risk account where I deposit small amounts and use stupid leverage and risk per trade in an attempt to get super fast and big profits (I've always been an avid gambler for fun). With this account I can make staggering returns in the short term, and have done several times in the past. But equally, I have lost the account very quickly and I'm interested in seeing what various risk strategies will do in terms of how many losses I can take in succession.

A simple tool or calculator where I could adjust the % risk would be so useful for playing about with my risky strategies and I was hoping one of the brains on this site had already developed or found one.

Before I get lynched for stupid risk taking, this is purely for my own fun and entertainment. I do everything right in my proper account and would never risk it. But when you put $1000 in to a separate account and go nuts for a few weeks, it's possible to make $50,000 or more. Take out $49,000 to spend and put the remaining $1000 back in to try another run for fun. I'm doing this as a slightly more favourable odds than I get at the casino, but it is still gambling so please don't anyone take this as an example for proper trading.

There, that's my disclaimer! So anyone got a calculator for this? :-)
  • #9
  • Mar 21, 2010 10:14am Mar 21, 2010 10:14am
This may help though it sounds like all you need is just a simple spreadsheet w/ an adjustable % field.
http://www.forexfactory.com/showthre...ght=calculator
In trading, there is no bullshit. You either make money or you don't.
  • #10
  • Mar 21, 2010 10:21am Mar 21, 2010 10:21am
Quoting flotsom
It's nothing spectacular. I have two trading accounts. One for sensible business and the other for experimenting with different high risk strategies.

On my sensible business account (my big one that I make my sustainable living from) I never risk more than 1% of my available equity on any given trade, and I know the way I trade this, it's virtually impossible for me to ever damage my account.

On the other hand I have a separate high risk account where I deposit small amounts and use stupid leverage and risk per trade in an attempt to get...
I had an idea it might be for something like that! How about a regular spreadsheet? (edit: ha, snap Mr Green, you were posting as I was typing!)

I do the exact same thing as you, a serious account for serious trading and then a (smaller) high-risk account for a fast buck, it's staggering how fast it can be compounded and like you say the odds are favourable. If it blows up it's no big deal, once you get in front it's winnings you're playing with anyway.

Same disclaimer applies, this isn't 'trading', try it at your own risk!!
  • #11
  • Mar 22, 2010 8:53am Mar 22, 2010 8:53am
Quoting FXTradeX6
If you have 687 losses in a row, you should quit.
Considering the attitude of 9 out of 10 people regarding losses most would have changed systems close to 687 times in that period also.
  • #12
  • Mar 23, 2010 6:54am Mar 23, 2010 6:54am
Quoting flotsom

So for example, I have a $10,000 account and risk 1% per trade (so a smaller $$ amount after every losing trade). How many losses does it take before I am at zero?
N = ln(% of Initial Account Balance) / ln(1 - %Risk per trade)

Since ln(0) is not possible, therefore it is not possible to lose all money provided that you are still able to risk 1% per trade even if you left only 1 buck.

no doubts, TJPLD is correct on your question.
  • #13
  • Mar 23, 2010 8:47am Mar 23, 2010 8:47am
Quoting ForexQuant
N = ln(% of Initial Account Balance) / ln(1 - %Risk per trade)

Since ln(0) is not possible, therefore it is not possible to lose all money provided that you are still able to risk 1% per trade even if you left only 1 buck.

no doubts, TJPLD is correct on your question.

I seem to have completely missed the target with the point of this thread. What I was after was a tool or calculator to help me assess the draw down with varying risk levels.

Thanks for those who helped with the spread sheet thingymajig.
  • #14
  • Mar 23, 2010 9:36am Mar 23, 2010 9:36am
Quoting flotsom
I seem to have completely missed the target with the point of this thread. What I was after was a tool or calculator to help me assess the draw down with varying risk levels.

Thanks for those who helped with the spread sheet thingymajig.
I already gave you the formula and what you need to do is just press the calculator button accordingly. i'm pretty sure this is easier n faster than using spreadsheet.
  • #15
  • Mar 25, 2010 4:33pm Mar 25, 2010 4:33pm
Quoting gangsta1
dont plan to lose...be a winner! Plan how much your gonna make!
Worst advice ever award goes to.........
Economists have forecast 9 out of the last 5 recessions
  • #16
  • Mar 25, 2010 5:11pm Mar 25, 2010 5:11pm
Quoting flotsom
Hi All,

Does anyone know of a calculator/tool which will tell me how many consecutive losses my account could handle if I risk a certain percentage each trade? I know how to work this out manually, but f@#* me Olive, it takes me most of the day as my maths is CRAP!

So for example, I have a $10,000 account and risk 1% per trade (so a smaller $$ amount after every losing trade). How many losses does it take before I am at zero?

Again, I know how to work all this out on pencil and paper, but I'm playing about with something and would like...
You mentioned the word calculator. If you can't use a one to answer your own question you're fucked. I'm not trying to be funny or nasty or anything, but you do need some VERY BASIC maths skills to be able to trade.
  • #17
  • Mar 25, 2010 5:27pm Mar 25, 2010 5:27pm
Quoting TheGreatMilenko
You mentioned the word calculator...
Post of the day.

TGM: Stick around for a while will you
  • #18
  • Mar 25, 2010 5:30pm Mar 25, 2010 5:30pm
If you risk 50% – you will wipe out as soon as you have 2 consecutive losing trades – 1 chance in 4

If you risk 25% – you will wipe out as soon as you have 4 consecutive losing trades – 1 chance in 16

If you risk 10% – you will wipe out as soon as you have 10 consecutive losing trades – 1 chance in 1024

If you risk 5% – you will wipe out as soon as you have 20 consecutive losing trades – 1 chance in 1,048,576 (about a million)

If you risk 2% – you will wipe out as soon as you have 50 consecutive losing trades – 1 chance in 1,125,899,906,842,620 or about a BILLION!

Somewhere between 2-5% is the maximum amount you can risk

The average bank trader or hedge fund only risks 1% to 1 ½ % of the account.

If you can’t be successful trading a micro account, don’t go up to a mini account. Don’t go up to a standard account if you can’t make a micro or mini account work.
  • #19
  • Mar 26, 2010 12:04am Mar 26, 2010 12:04am
Quoting Binnooh
If you risk 50% – you...
I think this is only correct under the assumptions:
1. You use fixed position sizing.
2. Winning probability of 50% with Risk Reward Ratio of 1.

The actual calculation is much complicated than this. I believe the calculation of risk of ruin is a better way for such kind of evaluation. Just google it.
  • #20
  • Mar 26, 2010 6:20am Mar 26, 2010 6:20am
Quoting TheGreatMilenko
You mentioned the word calculator. If you can't use a one to answer your own question you're fucked. I'm not trying to be funny or nasty or anything, but you do need some VERY BASIC maths skills to be able to trade.
Thanks for the wonderful advice. You must be an expert.

I'm so pleased to get personal opinions and gems of trading wisdom on this thread......despite the fact that I never asked for any advice or opinions. It really is heart warming to see experts willing to tell me what I will or will not be able to achieve. It's just a shame you never took the time to read the question properly or my other posts in this thread. Perhaps in my equally worthless opinion, if you can't read and understand and correctly interpret a simple question.........you're fucked!

My mathematical ability is shit......always has been. But I can't see how you would think that has any bearing on my ability to trade? All I wanted was a simple tool to help me work a few things out quicker than I currently do. My trading is absolutely fine despite my poor maths. But again that's just what I think. I've only posted a few times on this forum so I must be a "nooooobie" trader. You on the other hand have posted much more than me, so presumably that instantly qualifies you as an authority. Congratulations! I thought life was pretty good now with the way I trade.....I can't wait to be as good as you.


To all the other people on this thread who did read my question and were kind enough to offer help, tools, and calculations.......THANK YOU! You are precisely the kind of people that make this community so good. I really do appreciate the time you took to try to help me with what I was looking for.
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