How Much Do You Risk Per Trade?

i agree... % values depend on the account balance

if i had a balance of 1 000 000 €
i surely would not risk more than 0.1% per trade

on the other side with an account balance of 500€ even 10% would be okay for me at least if i am not jobless

I risk no more than 10% per trade.

3-5% is what i usually do. i wont take anything more than 5%

I’m new to the forum & forex trading and seem to be mixed up with the risk ratios discussed here.
If I have a capital of $1000 in my account with a leverage of 100:1 hence $100,000 available for trading and I trade the EURUSD with each pip approximately $10.
Risking 1% of my capital (i.e. $10) is equivalent to having a stop loss of 1 pip. Considering spreads & commissions. This does not appear worthwhile as I am bound to hit my stop loss every time I trade.
I’m sure there is definitely something wrong with my analysis. Could someone help me understand the risk referred to here?

looking through all the replies, i am a bit surprised.

i only risk max 0.5%, and it is still not all comfortable for me

I would keep it to less than 1% to at most 2% risk per trade for short term trade. On the average, it should be around 1%. On per trade basis, whether it is on the low end or high end percentage depends on whether that trade is an outright or a hedge.

When trade is on, it is likely that I will have multiple orders established, one in forex while others in futures/CFDs. These orders may be a hedge against each other at times while they may be outright trades in the same direction at other times. It depends on market.

While it may be 0.1 - 2% risked per trade in forex trading capital, it will similarly be 0.1 - 2% risked per trade in other instruments. Taken as a whole, I will try to keep my entire risk exposure to around 1% of my overall trading capital.

Controling such stringent risk exposure on the overall trading capital is challenging for long term trades as multiple trading 'instances' may overlap each other due to their lengthy lifecycle. This is one reason I have try to avoid long term trade because the potential collective drawdown can be huge.

So, you have to take into consideration your trading strategy and the role of each trade in the overall strategy when determining the risk per trade. But a cap on overall risk exposure is a necessity for risk management purpose. It is a responsibility.

1-2% for intraday trades. Wouldn't say that this suits me well but infortunately stop-losses are still quite common things

You need to trade with a much lower position size. Assuming you are trading instruments at the standard $10 per pip , rather than entering with 1 full lot, you could use a mini lot ($10,000). That would allow you to use a 10 point stop for the same dollar risk. A micro lot ($1000) would allow you to use a 100 pip stop etc.

The first step should be to determine the size of stop you require. Lets assume as an example, its 40 pips. You'd need each pip to be worth 25 cents to stick to your $10 max loss. There are brokers who would allow you to take out a position of exactly that size (Oanda for example), or you'd have to trade 2 or 3 microlots, and be slightly below, or slightly above the risk level you've set for yourself.

So pick a stop size that makes sense, then change the position size to keep the losses within your 1% rule.

As I posted earlier in this thread, I used a risk of 10% per trade. Starting 2012, I will use 3% of my initial balance. However, after a winning trade, I will use 3% of my initial balance plus 10% of my accumulated gain up to a maximum of 10% of my total balance.

For example.

Initial balance $25,000

First trade:
% risk of first trade (3%): 750
Outcome: Win
Dollar gain: $5,000
Ending balance: 30,000

Second trade:
3% of initial balance: 750
10% of gain: 500
Total risk: 1,250

I will maintain a 3% risk of my balance until I have accumulated gain.

2% seem good to me too...

My input.

I depends on where my account is at relative to its starting point. I depends on the trade unfolding before my eyes. If I have learnt 1 thing this year it is to make the market pay when highly probable setups present themselves. In my case I started with stricted "set" risk% values only to find myself getting not very far. The strong trades yielded great returns but strings of loosing trades can effectively wipe the gains. As mentioned it depends on the situation but in an event which I would usually have all confidence trading I will risk up to 10%.

Now the account is king. You want to protect it so I don't advocate risking 10% at all if you are new, or if the account is around even (starting balance), is in the red or only merely in front. My first 10% trade took place when I was already up over 23%. The damage is usually managed by watching what is happening. If the market isn't behaving as normal then I will pull it early but I will in as many instances possible give the market time. The 10% is essentially an amount to kick start towards a new high and is only as mentioned taken when the planets are in line and the account can handle the drawdown. In most normal cases the risk will be between 1-3%.

RT

Many thanks Razzle

I may not be a very disciplined trader, coz there are time that i risk up to 5% or my capital, but not always. most of the time its just 2% or less.

Around 5%, more if needed. And, in agreement, how much you risk depends on how much money you have in your account. If you have only a $100, you wouldn't really mind risking everything. But, if you had $100,000; you wouldn't want to risk more then 10%.

Unless your net worth is 10mill+ then 10% risk on a 100k account is absolute madness. You WILL blow accounts from time to time using 10% risk.

Well 10% is a little drastic, but if you are careful and know your stuff then 10% well get you very good money!

10% of $100 is, in essence, like 10% of 100,000. Sorry if my reasoning is outlandish, that's the way I think.

This video is a must see for all aspiring traders ... basically it explains why most of us fail - and if you risk 10 % per trade you will fail sooner or later

If you know your stuff then you know that losses are inevitable and even if you have a 90% win rate, 10% risk is a SURE way to blow your account. Newbies beware, 10% risk on any trade is not good money management. It is fine if you have a very small account in comparison to your net worth and don't mind blowing an account frome time to time, but if it will be painfull to blow your account then I would suggest 1% max.

Nice vid. This is why I say even if you have a 90% win rate you will blow an account using 10% risk. If you use standard statistics then chances of blowing with a 90% win rate are extremely low. But the market STREAKS. Your losers will be bunched as well as your winners so the losing streaks will be detrimental if you take on this much risk.