Risk % ???

nac

Well-Known Member
#1
It's recommended that to risk 2% in one trade is ideal for beginners, I read.

But I couldn't find such low risk trade opportunity (may be I am not calculating it right... don't know) in bigger time frame or don't know how/where to look.

I understand it that the 2% risk is of trade value, not 2% of my whole capital.

So assuming I have Rs. 100/- as capital. I buy 1 unit of ABC stock worth Rs. 50/- and my stop loss is Rs. 49/- (not Rs. 48/- as my stop loss)

Now my question is whether...

- I am wrong calculating the risk based on trade value (or)
- I am not good at finding the low risk trade opportunity

Those who are good at money management and practicing in real time, please leave your comments.
 

TraderRavi

MM is the holy grail
#2
It's recommended that to risk 2% in one trade is ideal for beginners, I read.

But I couldn't find such low risk trade opportunity (may be I am not calculating it right... don't know) in bigger time frame or don't know how/where to look.

I understand it that the 2% risk is of trade value, not 2% of my whole capital.

So assuming I have Rs. 100/- as capital. I buy 1 unit of ABC stock worth Rs. 50/- and my stop loss is Rs. 49/- (not Rs. 48/- as my stop loss)

Now my question is whether...

- I am wrong calculating the risk based on trade value (or)
- I am not good at finding the low risk trade opportunity

Those who are good at money management and practicing in real time, please leave your comments.
2% risk is for capital per trade, is not it ?
 

quinox

Active Member
#4
It's recommended that to risk 2% in one trade is ideal for beginners, I read.

But I couldn't find such low risk trade opportunity (may be I am not calculating it right... don't know) in bigger time frame or don't know how/where to look.

I understand it that the 2% risk is of trade value, not 2% of my whole capital.

So assuming I have Rs. 100/- as capital. I buy 1 unit of ABC stock worth Rs. 50/- and my stop loss is Rs. 49/- (not Rs. 48/- as my stop loss)

Now my question is whether...

- I am wrong calculating the risk based on trade value (or)
- I am not good at finding the low risk trade opportunity

Those who are good at money management and practicing in real time, please leave your comments.
The way i do it is....

i calculate risk as a % of my capital per trade.

Lets say my capital - 100000
Lets say I risk 2% of my capital on each trade.
so 2% of 100000 = 2000...this is the max risk i can take on a single trade.

Now lets say i want to buy nifty futures at 5500. My SL will be at 5480 i.e. 20 points. So if my SL is hit, I am going to loose 20 * 50 = 1000 per lot.
As my maximum risk on a single trade is 2000, hence i will buy only 2 lots of nifty.

The above is a simple calculation. If you want to be more stringent, then you can add your transaction cost , slippage etc and decide your position size accordingly.
 

nac

Well-Known Member
#5
Quinox,

Thank you...

Assuming 30k for 1 lot of NF, you're using 60k for the above position.

You have 40k more in your account and you see an opportunity to trade with the stop loss of 2% i.e., another 2k.

Now total risk is 4% of your capital.

Would you take the opportunity to trade? (or)
You won't trade coz the 2% risk is already taken (2 lot of NF)
 

quinox

Active Member
#6
This 2 % risk on capital is per trade.

Now you can have 3 different trades simultaneously , lets say 1 each in nifty, SBI, LT, each with 2% risk on your capital. That means your total risk at that point of time will be 6% on your capital. The question is are you comfortable with that kind of risk ? That is why people have different set of rules for managing risk, like...

one will take 1% risk on his capital per trade
At any point of time the total risk of all your positions should not exceed 3% of your capital etc etc.
 

Mr.G

Well-Known Member
#8
I allocate upto 10% to one company in my portfolio. Usually the % is 2-5 per scrip.
 

Cubt

Well-Known Member
#9
It is rare to find 2% risk trade always, sometimes u would find a trade which is worth risking more than 2% of ur capital.

Most of the time I trade on stock futures positional. I hold 2 stocks mostly n my total risk will not exceed 5% of my trading capital.
For intraday, I just hold one stock for which I risk 2% of my capital.

From my experience, its not that 2% risk tat matters. Its actually how much we are willing to lose, the money u lose should not have any impact on ur next trade decision
 

Rish

Well-Known Member
#10
I don't know...

Will see what the successful traders say about this...
2% risk impossible to trade..........

When i take trade, minimum 12% to 16% based on time frame. Reason being

i. I am not at all a intraday trader. My no of trades will be per month maximum 4 or 5.

ii. Normally i will come out 20% profit on Hourly Time Frame.

iii. Daily time frame 60% profit.

Both, i will keep 12% to 16% risk.

Example

Today 12.15 candle nifty Hourly Buy Initiated at 5675 level, where i have taken 5800 call 34.70, my exit rule as per Hourly confirmation 20%, i.e. my exit place is near to 41.80 (and my trade closed today). My s/l 28.70 below previous candle low (all are hourly candle)

Now i will wait for the next entry, till i will get the confirmation. No more trades till i am convinced.

My next watch list is Reliance Put Option, if i will get opportunity in hourly time frame, definitely i will take trade with the above rule.
 

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