lundi 30 mars 2015
Isn't 2% per trade massively flawed?
Posted on 10:36 by nice news
Hi all,
Just a thought:
People all over the web say only risk 2% per trade which although sounds good, surly is massively flawed, for example:
I enter long with a 20 pip SL, risking 2% of my account. There is a black swan event/caught in news event causing slippage (which do, and will happen)
I get slipped for lets say... 200 pips (nothing compared to EURCHF recently)
And now, 20% of my account is gone?
Or even worse, in EURCHF case, you are now in massive negative equity.
Wouldn't a better approach to designate a 'realistic worst outcome' say of 2000 pips, then work out how much equity you need in your account to sustain such a loss?
For example, $20000 per 1 lot traded (meaning even in a worst case scenario and you are slipped 2000 pips, you would be in a much better financial position to handle the loss) ... or at least, wouldn't enter negative?
Surely risking 2% per trade fluctuates a LOT based on SL size (10 pips away vs 300 pips away) in regards to market exposure and risk?
Just a thought:
People all over the web say only risk 2% per trade which although sounds good, surly is massively flawed, for example:
I enter long with a 20 pip SL, risking 2% of my account. There is a black swan event/caught in news event causing slippage (which do, and will happen)
I get slipped for lets say... 200 pips (nothing compared to EURCHF recently)
And now, 20% of my account is gone?
Or even worse, in EURCHF case, you are now in massive negative equity.
Wouldn't a better approach to designate a 'realistic worst outcome' say of 2000 pips, then work out how much equity you need in your account to sustain such a loss?
For example, $20000 per 1 lot traded (meaning even in a worst case scenario and you are slipped 2000 pips, you would be in a much better financial position to handle the loss) ... or at least, wouldn't enter negative?
Surely risking 2% per trade fluctuates a LOT based on SL size (10 pips away vs 300 pips away) in regards to market exposure and risk?
Isn't 2% per trade massively flawed?
Categories: Isnt 2% per trade massively flawed?
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