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

Gayi Bhains Pani Mein
#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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