Traderji.com


Easiest, 1-step guide to calculate how much you can risk in a trade.

Discuss Easiest, 1-step guide to calculate how much you can risk in a trade. at the Risk & Money Management within the Traderji.com; A trader doesn't need to know how much he's risking by using the risk formula ...


Go Back   Traderji.com > METHODS & STRATEGIES > Risk & Money Management


Risk & Money Management Discuss risk and money management techniques and methods to protect your trading capital.


Reply
 
Thread Tools
  #1  
Old 13th November 2016, 10:16 PM
goldenedge's Avatar
Member
 
Join Date: Jun 2016
Posts: 72
Thanks: 4
Thanked 134 Times in 35 Posts
goldenedge will become famous soon enoughgoldenedge will become famous soon enough
Post Easiest, 1-step guide to calculate how much you can risk in a trade.

A trader doesn't need to know how much he's risking by using the risk formula everytime. For a large 50 or 100 crore trade, 28% risk and 29% risk are different but for a normal trader, it doesn't matter.

So, calculating the risk everytime is a bad idea. The easiest 1-step guide I use to calculate my risk is:

STEP 1: Enter a trade with 'x' capital.

If small to medium size movement worry you then you need to lower your overall risk(by cutting leverage or capital, moving stoplosses etc)

If a small to medium size movement against your trade makes you say "meh" then you must increase your risk(increasing leverage or capital)


Simply put, if you're too worried then you need to lower risk and if you are not worried at all then you must increase your risk. The ideal solution is to find a balance between them. It sounds really hard but it's easy.

Example: If trading 10 contracts makes you say 'meh' and 20 contracts gives you anxiety then find a balance between them ->around 13-15 contracts.

This always works for me.

The reason why you need to find a balance: You won't stick to your system if you're risking either too high or too low.

i) Too high risk worries you if a trade is going against you. Even though you might be right or wrong, you live in a perpetual state of worry. All of a sudden there will be that "one" trade where you loose more than you calculated. Eventually, you'll end up sad and depressed in one way or another ,especially when the trade goes against you ->you get out early -> trade goes in your initial direction. Yes, I know the feelz when the happens .

ii) Too low risk doesn't force you to stick to your system. If a trade is moving against you then you'll be like " it's okay! I am not risking much. Let's stay in" even when your system is screaming for you to get out of the trade. So, risking too low is also dangerous and you'll loose more than you think because the small movement keeps on adding up and becomes huge.

Isn't it surprising that you'll always loose more than you think in both cases?

Advertisements



Advertisements


Last edited by goldenedge; 13th November 2016 at 10:18 PM. Reason: corrections
Reply With Quote
Advertisements
Reply

Bookmarks


Advertise Here


Thread Tools

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads for: Easiest, 1-step guide to calculate how much you can risk in a trade.
Thread Thread Starter Forum Replies Last Post
free program to calculate risk (montecarlo,efficient frontier and more) bob lazar Risk & Money Management 2 9th December 2013 03:02 PM
Step By Step Video for Importing NSE EOD Data. deepanshah13 AmiBroker 0 28th February 2011 08:23 AM
afl to calculate risk, profit and RR Ratio 1sandeepgupta AmiBroker 5 1st January 2011 04:50 AM
Beginners Step by Step trading lessons with video marcus Beginners Guide 77 16th May 2008 12:37 PM
New to this Forum,New to IPO,NRE,Need Step by step Guide sathyguy Initial Public Offers (IPO's) 1 12th October 2006 03:59 PM


All times are GMT +5.5. The time now is 11:44 PM.

Indemnity, Disclaimer & Disclosure Notice:
By visiting Traderji.com you automatically indicate that you agree to our Forum Rules, Indemnity, Disclaimer & Disclosure Notice and General Content Disclaimer Notice and indemnify Traderji.com, its associates and related parties of all claims howsoever resulting from the usage of the forum/site.
Disclaimer: Trading or investing in stocks & commodities is a high risk activity. Any action you choose to take in the markets is totally your own responsibility. You are recommended to make appropriate enquiries and seek appropriate advise before sending money, incurring any expenses, acting on recommendations or entering into any commitment in relation to any advertisement published here. Traderji.com does not vouch for any claims made by the advertisers of products and services. Traderji.com will not be held liable for any consequences in the event such claims are not honoured by the advertisers. Traderji.com will not be liable for any, direct or indirect, consequential or incidental damages or loss arising out of the use of any information by anybody mentioned anywhere on this site.
Disclosure: The information in this forum is neither an offer to sell nor solicitation to buy any of the securities mentioned herein. The writers may or may not be trading in the securities mentioned.
All names or products mentioned are trademarks or registered trademarks of their respective owners.
General Content Disclaimer Notice:
In light of our policy of encouraging candid, open exchanges of views and the rapid distribution of information originating from many sources, Traderji.com cannot determine the accuracy or legality of any information that may be uploaded to the forum. Opinions, advice and all other information expressed by participants in discussions are those of the author. You rely on such information at your own risk. You are urged to seek professional advice for specific, individual situations and not rely solely on advice or opinions given in the discussions. Since Traderji.com is an open and free discussion forum, any comments made by members of this forum in their posts reflect their own views and not of the owner or administrator of Traderji.com. Thus the owner/administrator indemnify themselves of all claims whatsoever and will not be liable or responsible for any members comments/views in this forum Traderji.com. Although we constantly delete all irrelevant content and/or SPAM, if you should find any objectionable or offensive posts made by members of this forum which you would like to bring to our notice for removal then please Contact Us.
 


Copyright © www.Traderji.com 2001 - , All rights reserved.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 125 126 127 128 129 130 131 132 133 134 135 136 137 138 139 140 141 142 143 144 145 146 147 148 149 150 151 152 153 154 155 156 157 158 159 160 161 162 163 164 165 166 167 168 169 170 171 172 173 174 175 176 177 178 179 180 181 182 183 184 185 186 187 188 189 190 191 192 193 194 195 196 197 198 199 200 201 202 203 204 205 206 207 208 209 210 211 212 213 214 215 216 217 218 219 220 221 222 223 224 225 226 227 228 229 230 231 232 233 234 235 236 237 238 239 240 241 242 243 244 245 246 247 248 249 250 251 252 253 254 255 256 257 258 259 260 261 262 263 264 265 266 267