Good that Simpletrader posted an old post on position sizing and risk control.
@ST sir I am putting a practical problem below (may appear stupid, but asking nevertheless)
Trading capital 10lakh
Trade: swing with a 5-10day hold
Risk per trade 1% which is 10000
Long signal in 'ABC'
stop loss fortunately small exactly at 1%
Now theoretically I will use up my entire capital on this trade with overall risk of 10000 or 1%
Its usual to get 1-2 more signals during the period my entire capital is being used for the "ABC" trade
What should be done:
??Leverage
??Fix capital allocation per trade, like divide 10lakh into 4 parts of 2.5lakh each for multiple trades
Taking lesser risk on entire capital at any given time will also reduce capital appreciation inspite of streak of winners.
@ST sir I am putting a practical problem below (may appear stupid, but asking nevertheless)
Trading capital 10lakh
Trade: swing with a 5-10day hold
Risk per trade 1% which is 10000
Long signal in 'ABC'
stop loss fortunately small exactly at 1%
Now theoretically I will use up my entire capital on this trade with overall risk of 10000 or 1%
Its usual to get 1-2 more signals during the period my entire capital is being used for the "ABC" trade
What should be done:
??Leverage
??Fix capital allocation per trade, like divide 10lakh into 4 parts of 2.5lakh each for multiple trades
Taking lesser risk on entire capital at any given time will also reduce capital appreciation inspite of streak of winners.