How much of your balance/capital should you trade with? | Forex Factory

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How much of your balance/capital should you trade with?

  • #1
  • First Post: Jan 30, 2015 1:37pm Jan 30, 2015 1:37pm
So lets say for example someone has $10,000 in there account balance. How much of that balance should be traded at one time?

Whether you are opening 1 trade or opening 20 trades. The question is how much should the total percentage of your account balance should be risked at on given time.
  • #2
  • Jan 30, 2015 3:05pm Jan 30, 2015 3:05pm
For me....

1% per trade.
5% in total.

All the best,
Bullbear80
Even a journey of a thousand miles starts with a single step.
  • #3
  • Jan 30, 2015 3:10pm Jan 30, 2015 3:10pm
Quoting BullBear80
For me.... 1% per trade. 5% in total. All the best, Bullbear80
Hey Bullbear80,

Thanks for the reply. Just out of curiosity why do you trade so little of your balance? Personal preference or based off bad experiences trading more of your balance?

Do you day trade or hold your trades for 2-14 days?
  • #4
  • Jan 30, 2015 3:35pm Jan 30, 2015 3:35pm
I have been trading for years and I generally use as much of my balance as I can only because what is the point of having money in your balance that you are not trading with?

I trade 55% - 65% of my account balance with 100:1 leverage. I am not a day trader in respect to I never open and close trades on a daily bases. My trades are usually kept anywhere from 4-14 days long as I follow trends on H4 and trade on H4 timeframe.

This thread was opened just for general discussion and other peoples perspectives and opinions on what they think is the best amount of your available balance to trade with.
  • #5
  • Jan 30, 2015 3:58pm Jan 30, 2015 3:58pm
All in!
  • #6
  • Jan 30, 2015 4:01pm Jan 30, 2015 4:01pm
Quoting bodypip
All in!
Obviously you have to have some percentage in your free margin for fluctuation, but what youre are saying is you use as much as you can with room for fluctuation?
  • #7
  • Jan 31, 2015 8:24am Jan 31, 2015 8:24am
Quoting harrisonw
{quote} Hey Bullbear80, Thanks for the reply. Just out of curiosity why do you trade so little of your balance? Personal preference or based off bad experiences trading more of your balance? Do you day trade or hold your trades for 2-14 days?
Just the way I trade, all about preserving my capital. Generally I trade trends on the daily charts. When I open my first trades, I place my stoploss at 1% initially. As the market moves in my favour, I will adjust my stoploss until I reach breakeven and then on into profit. I will then look to open new trade(s) at 1% risk, when that trade too becomes profitable, I will look to open another and so on and so forth. This method allows me to leave as little risk on the table as possible. I don't use TP's, just trailing stops.

Cheers,
BB
Even a journey of a thousand miles starts with a single step.
  • #8
  • Jan 31, 2015 8:40am Jan 31, 2015 8:40am
Quoting harrisonw
So lets say for example someone has $10,000 in there account balance. How much of that balance should be traded at one time? Whether you are opening 1 trade or opening 20 trades. The question is how much should the total percentage of your account balance should be risked at on given time.
Trade whatever % you want, it's your money and no one elses.
  • #9
  • Jan 31, 2015 9:16am Jan 31, 2015 9:16am
Quoting harrisonw
I have been trading for years and I generally use as much of my balance as I can only because what is the point of having money in your balance that you are not trading with? I trade 55% - 65% of my account balance with 100:1 leverage. I am not a day trader in respect to I never open and close trades on a daily bases. My trades are usually kept anywhere from 4-14 days long as I follow trends on H4 and trade on H4 timeframe. This thread was opened just for general discussion and other peoples perspectives and opinions on what they think is the best...
don't you worry the market wiping you within minutes on some big event ? Margin calls ? A 1% move would all it takes to wipe out 55-66% of your account with one trade ? Not sure if serious or trolling ? And your claiming your essentially 100% trader, hey if that's your success rate why even post in here ? You should be living on a beach with beautiful dancers all around you.
Learn, a forex trader must, unlearn and relearn he will.
  • #10
  • Jan 31, 2015 9:33am Jan 31, 2015 9:33am
Quoting harrisonw
So lets say for example someone has $10,000 in there account balance. How much of that balance should be traded at one time? Whether you are opening 1 trade or opening 20 trades. The question is how much should the total percentage of your account balance should be risked at on given time.
It helps to know the stats of your approach. I can at times be trading up to 20% of my account at a single time across a diversified portfolio that is not strongly correlated but I only risk between 0.25% to 1.0% of trade capital per trade. The important factor to take note of is is the degree of correlation between your instruments where a correlated portfolio ups your risk exposure.

If each trade is independent then it really is the same thing if you take say 20 trades serially or 20 trades at the same time across 20 different non-correlated instruments. Of course the latter gives you bigger bang for your trade capital which is what I prefer but efficient trade management of multiple instruments without errors needs to be taken into account as well.
  • #11
  • Jan 31, 2015 9:43am Jan 31, 2015 9:43am
I use the Kelly formula further modified by several other factors (based on the trade's signal strength, fundamental picture, support/resistance picture, and carry revenues/costs), so the amount I risk per trade varies as my expectancy varies. At the moment it's a max of 10% per trade, and I may have up to 4 or 5 trades on at any given time (usually only 2 or 3 though).
  • #12
  • Jan 31, 2015 2:40pm Jan 31, 2015 2:40pm
Quoting harrisonw
So lets say for example someone has $10,000 in there account balance. How much of that balance should be traded at one time? Whether you are opening 1 trade or opening 20 trades. The question is how much should the total percentage of your account balance should be risked at on given time.
The issue you raise is one that that most traders overlook, especially newbies. They limit their trade risk to say the accepted norm of 2 percent and then open multiple positions at the same time and don't realise the implications of this. Should there be a difference between your individual trade risk and your at market risk appetite? Having nothing really to add to what has been already discussed in the above posts but this issue is not something that is usually covered in most MM topics.
Audentes Fortuna Juvat
  • #13
  • Jan 31, 2015 2:49pm Jan 31, 2015 2:49pm
Quoting Copernicus
{quote}efficient trade management of multiple instruments without errors needs to be taken into account as well.
To true! My ability to make $(5king stupid mistakes, especially when I have multiple trades open never ceases to amaze me. Must be an age thing . Jokes aside though, this is a real issue for manual traders.
Audentes Fortuna Juvat
  • #14
  • Jan 31, 2015 4:31pm Jan 31, 2015 4:31pm
I risk only 2% per trade.

I trade on 9 different currency pairs.

If a new setup occurs, I will calculate 2% of clean balance (assuming previous trade hit stop loss) so it will either be higher or lower exposure.

If multiple setups occur at the same time, I will divide 2% of the clean balance to that many setups.

Sorry my English is not very good.

Cheers
  • #15
  • Jan 31, 2015 8:06pm Jan 31, 2015 8:06pm
Quoting Nijee
{quote} To true! My ability to make $(5king stupid mistakes, especially when I have multiple trades open never ceases to amaze me. Must be an age thing . Jokes aside though, this is a real issue for manual traders.
That's where pending orders are useful in that you can set and forget to a degree. Where I usually come undone is on those announcement price spikes whereby say 4 correlated instruments make unpredictable multiple direction price movements.....*gags*. It's times like those that define me but when I am in form, there is no stopping me.

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  • #16
  • Feb 1, 2015 11:50am Feb 1, 2015 11:50am
Risk percentage used and Stop Loss for each position will determine the position size (and allocated margin taking into consideration leverage used).

Based on the system, strategy or method used, a Stop Loss should be known before entering the position.

Example :

Suppose Account Current Balance (or Free Margin) whichever is less is = 10000
And if you're using a leverage of 1:100, trading EUR/USD , so required margin will be around $1200 for a standard lot.
If you're using Risk Percentage 5% per trade, it means you'll allow for a (5% x 10000) = $500 per trade.

Now supposed based on system or method used, your determined Stop Loss is 200 Pips. And since pips value for EUR/USD is $10 for standard lot.

THEN:
Position size = [Risked Amount/(SL Pips * Pip Value)]
Position size = [500/(200 * 10)]
Position size = 0.25 Standard Lots

Keep in mind that this trade will freeze $300 of your balance as Margin (Allocated Margin = Position Size x Required Margin = 0.25 x $1,200 = $300)
No guts, no glory
  • #17
  • Feb 1, 2015 12:03pm Feb 1, 2015 12:03pm
Let me give you the best answer:

-depends on the strategy, are you looking for a few fat winners or many small winners?

-depends if 10k is your money (starting balance) or brokers money (you are trading with pure profits)? If it is yours risk small. If it's brokers money risk big.
  • #18
  • Feb 1, 2015 5:48pm Feb 1, 2015 5:48pm
Trend following for 100-700 pips less than $16 a point for every $10k in deposit, however you can add more once in profit.

Day trading for 4 pips -21 pips $25-$50 a point per $10k. (you must be very accurate to do this)
All Assets NAS100 GLD BTC AUS JPY GBP All Time Return: 17.7%
  • #19
  • Last Post: Feb 8, 2015 9:31pm Feb 8, 2015 9:31pm
Quoting COGSx86
{quote} don't you worry the market wiping you within minutes on some big event ? Margin calls ? A 1% move would all it takes to wipe out 55-66% of your account with one trade ? Not sure if serious or trolling ? And your claiming your essentially 100% trader, hey if that's your success rate why even post in here ? You should be living on a beach with beautiful dancers all around you.
Where did I claim to be a 100% trader?
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