Never Risk More Than 2% Per Trade

[kaiceaziz]

One thing to be taken into account whenever you trade is how much money you gonna risk in your trades. But whatever it is dont ever risk more than 2% per trade. This is the most common mistake to trade more than that and losing all your money. That is why you have to set 2% stop loss rule to avoid such a fate to never suffer a large loss.

Losing only 2% per trade means that you would have to maintain 10 consecutive losing trades in a row to lose 20% of your account. Even if you sustained 20 consecutive losses that you want to overtrade the total drawdown would still leave you with 60% of your capital intact.
So one thing to withstand the harsh market conditions is to learn how to control your losses. And that is how important to know the rule of 2% stop loss.

 

[sindarin]

2% that is too low, for me i will risking as much as 5% of my capital, the risk and reward ratio is more make a sense rather than spend 2% only of my capital, also i prefer trade with acceptable lot depend on my capital, $1000 = 0.1 lot.

 

[Daisy]

I guess controlling your risk is always is a smart thing since we can lose a lot of our money so why let it slide away. We should learn to manage our money. WE can control our losses and using sl and such. The less we lose the better. I think in forex we must learn how to control our losses and then take some profit and save it for a rainy day. Money management is a part of forex.

 

[sindarin]

I guess controlling your risk is always is a smart thing since we can lose a lot of our money so why let it slide away. We should learn to manage our money. WE can control our losses and using sl and such. The less we lose the better. I think in forex we must learn how to control our losses and then take some profit and save it for a rainy day. Money management is a part of forex.

SL is the more automatic way for trader to increase their awareness of losing money, risking 2% is quite low if you ask me, but if you want better income spend at least 3% and at most 5% of your capital, 6% still acceptable for me but i prefer that 3%-5% .

 

[willy]

yes this is the biggest rule in the forex and every new trader must know this rule before trading with live account because of the high risky of the forex and trading with money management save your account from margin call

 

[Jassi82]

2% that is too low, for me i will risking as much as 5% of my capital, the risk and reward ratio is more makNever risk more than 2% per trade. This is the most common - and yet also the most violated - rule in trading and goes a long way toward explaining why most traders lose money. Trading books are littered with stories of traders losing one, two, even five years' worth of profits in a single trade gone terribly wronge a sense rather than spend 2% only of my capital, also i prefer trade with acceptable lot depend on my capital, $1000 = 0.1 lot.

 

[Decub]

SL is the more automatic way for trader to increase their awareness of losing money, risking 2% is quite low if you ask me, but if you want better income spend at least 3% and at most 5% of your capital, 6% still acceptable for me but i prefer that 3%-5% .

I quite agree with you, I am still one of those who believe in risking between 3-5% of our equity per trade. It keeps you on a safe track and yet, the possibility of making reasonable profit from your trade if your analysis pay. Risking too low though, safeguards your capital but still give you minimal profit.

 

[sindarin]

Yeah the risk and reward ratio with lower percentage won't give us maximum profit even with more resistance to loss, and i totally disagree with thread starter too, i think thread starter is a "safe" kind trader.

 

[budado]

Its very important that we know how to control our trade. I do trade just 2% of my trading capital and each month I do only earn about 5 to 10% profit. I do know the profit is small but since I do use small percentage of my money only I do end up losing low also.

 

[Pettyeve]

Where as risking our trading capital too high is not good way for us to be trading, it s better for us to trade and expect to have better profit. My capital that I will be risking in forex will depend on the market and my analysis.

 

[Decub]

Well, generally, I think it lies more on how much skills we've got. When we are knowledgeable well enough to be called Forex traders, the tendency that we would increase our risk bearing ratio would be there, unlike when we are still in the learning stage.

 

[budado]

I do follow this risk and money management but I realize that I only end up earning just 5 to 20% profit each month. Just imagine that I only use 2% of my trading capital to earn that much. Just imagine that 2% has turn to 5 to 20% its still a big earning.

 

[Faal]

Yes, 2% is a decent risk reward ratio! I think, never take more than 3-4% risk ratio in your per trade position! Actually, traders need to select risk ratio according to their trading plan! By the way, don’t trade with your real money if you don’t have a good trading system.

 

[sininfinity]

I do follow this risk and money management but I realize that I only end up earning just 5 to 20% profit each month. Just imagine that I only use 2% of my trading capital to earn that much. Just imagine that 2% has turn to 5 to 20% its still a big earning.

That is more than your bank can offer. lol Honestly 20% is a very big return for me. And I can not reach that target. lol But if someone is doing it successfully then I can only imagine what he or she can do in a year with proper money management.

 

[Tom Latham]

A very good point indeed I started with the 5% risk ratio but now it’s only 1%; yes now I am taking only 1% in my per trade.

 

[sininfinity]

A very good point indeed I started with the 5% risk ratio but now it’s only 1%; yes now I am taking only 1% in my per trade.

Let me guess. When it was 5% then your capital was relatively very low. And now you have considerably increased your capital and hence using 1% which still brings decent amount of profit after a certain period.

 

[bolide]

Never take too much risk in the forex trading. Take risk only when you have full confidence that you can't lose. There are some chances that you can win once or twice but you can't be lucky everyday. So be careful and never take too much risk. It's all about the money which you loves a lot.

 

[lioneld]

One thing to be taken into account whenever you trade is how much money you gonna risk in your trades. But whatever it is dont ever risk more than 2% per trade. This is the most common mistake to trade more than that and losing all your money. That is why you have to set 2% stop loss rule to avoid such a fate to never suffer a large loss.

Losing only 2% per trade means that you would have to maintain 10 consecutive losing trades in a row to lose 20% of your account. Even if you sustained 20 consecutive losses that you want to overtrade the total drawdown would still leave you with 60% of your capital intact.
So one thing to withstand the harsh market conditions is to learn how to control your losses. And that is how important to know the rule of 2% stop loss.

This is one my most important terminology; because when I take such a high risk reward ratio, then I face huge losses; so no way to go with more than the 2%.

 

[sininfinity]

Never take too much risk in the forex trading. Take risk only when you have full confidence that you can't lose. There are some chances that you can win once or twice but you can't be lucky everyday. So be careful and never take too much risk. It's all about the money which you loves a lot.

The confidence you are talking about is arrogance. There is no certain way to know that the market will move in your desired direction. So a trader should always keep losses in check.

 

[Tom Latham]

The confidence you are talking about is arrogance. There is no certain way to know that the market will move in your desired direction. So a trader should always keep losses in check.

Good point; I know many blind traders who left the market already because of their overconfidence on their trading systems.