Posted by: joetradingplace | January 7, 2013

Risk per trade

A lot of traders are worried about wide stop loss on a trade, but you are a swing trader, you more likely to have a wide SL to give the market room to breath. I wouldn’t look at SL in pips, but as a percent of my account. So if you are risking 1 percent per trade, it doesnt matter if you have a 100 pip SL or a 20 pip SL…its still 1 percent, you just have to adjust your trading size accordingly.

Lets say I have a $10,000 account, 1 percent of my account is $100. So if a SL is 100 pips, i can take this trade with 1 mini lot. But if my SL is 20 pips away, i could take the same trade with 5 mini lots…but at the end of the day, the risk per trade is the same regardless of how many pips your SL is away from entry point. So dont let a wide SL put you off, you just have to adjust your trading size…and it avoids you to be chopped out of a good trade.

 

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Responses

  1. I agree with your article and I think it is the best way to avoid trading disaster…
    It’s my way of trading


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