Are You Taking the Right Risks in Trading? RISK Per Trade Basics

12 Apr

What portion of your equity should you risk for your trading positions?

In the today's article, I will reveal the types of risks related to your position sizing.

Quick note: your risk per trade will be defined by the distance from your entry point to stop loss in pips and the lot size.



🟢Risking 1-2% of your trading account per trade will be considered a low risk.

With such a risk, one can expect low returns but a high level of safety of the total equity.
Such a risk is optimal for conservative and newbie traders.

With limited account drawdowns, one will remain psychologically stable during the negative trading periods.

🟡2-5% risk per trade is a medium risk. With such a risk, one can expect medium returns but a moderate level of safety of the total equity.

Such a risk is suitable for experienced traders who are able to take losses and psychologically resilient to big drawdowns and losing streaks.

🔴5%+ risk per trade is a high risk.

With such a risk, one can expect high returns but a low level of safety of the total equity.

Such a risk is appropriate for rare, "5-star" trading opportunities where all stars align and one is extremely confident in the positive outcome.

That winner alone can bring substantial profits, while just 2 losing trades in a row will burn 10% of the entire capital.

🛑15%+ risk per trade is considered to be a stupid risk.

With such a risk, one can blow the entire trading account with 4-5 trades losing streak.

Taking into consideration the fact that 100% trading setups does not exist, such a risk is too high to be taken.



The problem is that most of the traders does not measure the % risk per trade and use the fixed lot.

Never make such a mistake, and plan your risks according to the scale that I shared with you.

❤️Please, support my work with like, thank you!❤️

I am part of Trade Nation's Influencer program and receive a monthly fee for using their TradingView charts in my analysis.

15 Apr

Nota

What do you want to learn in the next article: