risk per trade?

Do you calculate your risk per trade on your balance or on your equity? Sometimes equity can become much bigger than your real balance and it could get you in a trade with a bigger size then expected and become a winner...what to do?

Balance. Equity means nothing until the trade is closed.

It's simply a choice. You can use a MM system based on equity or balance. Using an equity based system, as you've already intuited, is riskier, but the rewards are greater. It's up to you. Try to find some Van Tharp stuff. You can visit his forums for very detailed discussions on MM systems.

Whatever you chose, be consistent.

Imho

it all depend on

1. size of account
2. number signal your system generates
3. how much you want to risk in total for all position combined 10% 20% of balance
4. how big is the potential DD for your system
5. system signal accuracy (most important) ie how many sigs are winners

I woud start by looking around here then Van Tharp Trade your way to financial freedom, and Kelly Ratios also investigate sharp ratios.

just a suggestion

If there's really a sizable difference I'd use the lesser of the two.

definitely balance

Balance.

I calculate my risk on the balance of my account. I wont open any new trades unless my Open trades are less than the 10% risk I'm trading on this account. My account is < 2K at the moment but as it approcahes >2K my risk will reduce <5% and at 10k to 2%.

My pip target in this period is 50-150 / week (current target at 10% risk and account ballance is 50pips and I've been hitting 120+ for the last 2 months every week except the christmas new year period where I didn't trade). Its a low figure by many accounts but it helps me manage my risk well (I didnt when I started, wiping my account 3 times before learnig less is more for my trading style). Currently exceeding my 10% / week profit target but it will get harder as the ballance increases and my required pips move into the 100+/ week range.

I trade live when possible (meaning I watch the trade and a live account) so when enetring the trade I will set a very tight stop 2-10pips and a limit at 25-50 pips area (profit/loss 1:2+). If the trade is going well I will manualy move the stop to break even or into the profit zone and extend the limit for a little more if the trend is very strong. Once I'm through the 50pip zone on profit I will not move my Limit (usually 55-60ish) and will often manualy leave the trade.

If they trade is looking iffy I will pull the pin early with any profit I have.

Once I have left the trade I will not go back in on that particular trend no matter how strong it is or how long it lasts (Important for me as this was an area that caused me to lose a lot of money perviously) but look for the setup on one of the other currency peers I follow.

Going to go with balance,

it can be confusing when you think about everything that is involved, specially big wins and big loses. Keep it simple, don't think about how much you can gain as long as you are gaining. I hope I'm making sense. all the best

min risk will be best, used to set at last few candle high/low as it stop loss..

Balance every time, 1% of balance. I see this as a long-term career, and keeping risk per trade limited is a key component of long-term success, imho. Once it's working, the balance quickly gets big enough anyway!

ST

Risk is a common thing in the forex market. Every trader should make a good trading plan to minimize their risks.

Our total risk should not be above 2%. Now it could be 2% in a single position or all the open positions. Some traders take 2% risk per trade then open 5 trade which becomes 10% risk. We should not do this type of mistakes.

I agree with you. I have seen many traders doing this. They can't control their greed. They want to make quick money with big lot and many opening positions but end up losing the money.

I think a 2% risk should be taken for trade. If money management is not followed, risk cannot be maintained.

Practice is important but for that we need knowledge. Real practice happens when we apply our knowledge in practical. For that we need to study and research a lot.

For me, it is a big loss in a trade. It is wise not to take more than 5% risk per trade.