How Much Should I Risk Per Trade? (Risk Management For Beginners)

[@don_pablo4946]

Beatuifully put man you just gave everyone the reason why 95% of retail traders suffer and why the 5% succeed this should be drilled into the mind of every trader if they wish to succeed

[@lilman1317]

Easily the best single video I've watched in over a year of trading. I have completely reevaluated my risk management seeing it out this simple. Thank you so much, my p&l will thank you!!

[@Ramesh151]

thank you-realistic presentation with high value content and good value

[@88keysLA]

This is awesome! Thanks! Also, something to think about, if you’re calculating through a higher amount like 50 trades or even 100 trades, the likelihood that you’ll have a 6 trade losing streak will be a bit higher.

[@DisciplinedTraderUK]

Yeah no worries! Exactly 👍

[@petra17118]

Thanking you. You just answered my question that I thought about 😊 I'm new to trading and heard you talk about trading strategies, if possible could you explain a few please?

[@atena6418]

It was really informative, thank you

[@jimmyn1357]

Underrated channel

[@nikmohdfazlinikibrahim6456]

new traders should understand this first before trading forex, if not, they are betting, not trading.

[@DisciplinedTraderUK]

Yes Nik I think a lot of new traders start out betting rather than trading. I did it myself! Once you know that, it's easier to start making progress

[@LewieLeway]

No, ALL traders should understand that this type of 'trading' is betting/gambling. When you trade, you give something and receive something in return. With this type of 'trading' you give something, receive nothing and gamble that your strategy is going to work. Strategies are just a way to try and give you an edge when betting.

[@DisciplinedTraderUK]

So if you received an actual share you'd view it differently?

[@LewieLeway]

@@DisciplinedTraderUK Yes, if I was intending to keep the share of whatever it was. No matter what the 'thing', if you are giving somebody something in the hope that you will get more back, but could just as easily lose that something, then you are gambling that 'thing'. Be it cash for more cash or an eye for two eyes. Not saying don't do it, I'm demo accounting now, hence my viewing of these helpful vids, but those that don't think handing over their one good eye in the hope of getting two good eyes isn't gambling could ultimately end up blind.

[@DisciplinedTraderUK]

@@LewieLeway That share could still become worthless if underlying asset ceases to exist though no? Like a company going bust etc. The term 'Trading' is used because of how the markets we trade came about in the first place. Things have evolved so that retails traders don't have to receive, hold and then physically sell the commodity/currency etc. However, the principal behind why a trader is buying or selling is still the same - to turn a profit. And we do that by managing the risk and seeking to trade with an edge. You make it sound like a trader bets all they have with the hope of a return when that's a long way from the truth.

[@naomil4759]

Really useful video, thanks so much for sharing.

[@furkan.s6305]

i like the video man . your teaching style is awesome

[@DisciplinedTraderUK]

Thanks William, I'm glad you found it useful!

[@furkan.s6305]

Disciplined Trader Can u just do a favor on me?? please if u can then please can u send me 500 bucks cause i wanna start my trade with a live account but i dont have that much money😔😔 plzzz if u can then do help me man!!

[@furkan.s6305]

Disciplined Trader if your answer is yes then do reply and if no then also do reply so that i can know about it...... i highly appreciate your work✌✌✌

[@DisciplinedTraderUK]

William I'd advise sticking to a practice account if you haven't got the money for a live account. You don't want to be trading with money you can't afford to lose because you'll put yourself under unwanted pressure.

[@furkan.s6305]

Disciplined Trader yes you are right, i will practice and back test my strategies and will accumulate some money to start my trade by doing some part time work!! thnx man!!

[@mk_4567]

20% risk per trade can work if you keep recalculating the percentage after each trade. That way you will never blow your account. Is that correct?

[@alang.2054]

No, it is not

[@smchala1]

once again great video, thanks, is there a way you could number your titles so new viewers can easily your series?

[@smchala1]

obviously the educational material not live trading :)

[@DisciplinedTraderUK]

Hi otssso, I have made a playlist for the educational videos called 'Trading Basics'. Most of them are in there bar a few I made when I started the channel. It's a good idea though and something I'll look at fixing. Thanks 👍

[@akohora9]

Excellent video well explained thanks

[@nicbleu]

i want to try go from 150$ to 300$ with a risk per trade of 8-9% of total acc, then ~ 300$ to 600$ with lower risk , like 5-6% of total acc, then ~600 to 1200$ with even lower risk~ 3-4% and finaly , when you get to 3k-5k + to never risk more then 1-2% of total acc for long term profitability .the idea beind it was,to skip the very slow start if you have small acc, and i cant understand why would you only trade with 1% of 150$ in the very beginning , i was wondering if my taught process was foolish ?

[@DisciplinedTraderUK]

It's a risky plan as you don't need many losses and you'd blow your account. Why do you think risking 1-2% works with a larger account but isn't necessary with a smaller one? You've contradicted yourself

[@robertbrawley5048]

One to two percent sound good because that will give you experience with as many trades as possible for your small account. Dont expect sucess right away expert 10 losses no wins before you regroup. The point is to educate your self before you I risk your nest egg ( your saved up money not in your trading account ) I havent traded forex just E mini. Ea. Contract was $12.50 yet to break even it would of cost me $37.50 not including commision so if you had $700 in an account and each losing trade was at break even and that's not likely the you would have enough money to initiate 14 trades. After 8 trades you will start to feel a rat do shorts and longs to understand how the market behaves on each excuted order. If your charting service has a simulator you will be using that far more than live trades . 10 times as much prehaps

[@ziloo956]

It's feasible but there's a catch First Like he said you are new and you may get 10 losses before making a single win or even more so let's say you were lucky And after 8 loosing strike see your account go to half That's using 8% i don't like how he calculated the outcome because he made the the account size constant witch is against the % rule he's talking about i don't know i calculated it like this 8% means (1-0.08)*account balance that's 0.92*account balance Witch means after 8 loosing strike 0.92^8=0.5132 So your account would go from 300$ to about 153 If you are willing to lose this much and your R:R is higher than 2:1 per trade it's only logical Also keep in mind the win rate used here is 50% you can do better or worst that's for you to find out. Anyways Good luck.

[@genestepney]

1% to 2% is to short, you have to give the trade wiggle room to move.

[@Ramesh151]

very good content-very valuable content-many thanks

[@DisciplinedTraderUK]

Glad it was useful Ramesh

[@candlemanFX]

😊 thank you so much👍

[@DisciplinedTraderUK]

Glad it helped 👍

[@pestd9206]

Cheers for this, what was your longest loosing streak?

[@DisciplinedTraderUK]

Hi Pete, I'd have to check some previous journals but I know I've had a streak of at least 8 before. That's when it gets difficult to keep a calm head

[@timc2912]

Amazing!

[@DisciplinedTraderUK]

Thanks!

[@LeahBbyCksPrice]

Yo this honestly the best video on risk management, but I do have a question. How do you find out the probability that you will have x amount of winners in a row ? Is it the same way you found how many would lose? Thanks in advance

[@DisciplinedTraderUK]

Hi Rari, yeah similar. You need to know your trade success rate then you can just work it out. If a trade has a 50% win rate then it has a 25% of having two winners in a row, 12.5% chance of three winners in a row etc

[@LeahBbyCksPrice]

@@DisciplinedTraderUK thank you so much for replying, that's what I thought at first but needed to be reassure.

[@ramynagib299]

Amazing

[@ghaaben]

@Disciplined Trader Could you please share the source of this risk management strategy ? I would like to use it in a thesis but I need a valid source. Thanks.

[@DisciplinedTraderUK]

Hi Gabriel, it just information I have collected, tested and used myself over the years. I didn't have a source for it

[@martinaasen8440]

The calculations for draw down is not correct tho

[@DisciplinedTraderUK]

I've answered this in your original comment Martin...

[@spiritualwoods4677]

I understand that you should risk 1% of your account per trade. But how does it work if you want to enter 4-5 trades? How can you enter many trades and still risk 1% of your account? How much do you risk per trade in this case?

[@DisciplinedTraderUK]

You can risk 1% on each of those trades if you deem them to be trades that meet your strategy rules. There isn't a difference between taking 5 trades one at a time or 5 trades all at once if they are all good setups

[@spiritualwoods4677]

Disciplined Trader And if I loose 2 of those trades for example, but the other 3 are still running and I see that my balance is 9800€ currently. On The next trades do I therefore risk 1% of 9800€ (always risk of what is left)?

[@DisciplinedTraderUK]

It's really up to you. I personally wait until I've had a 5% drawdown before I change the value of my 1% (so in your example, if the account fell to 9500 then I would change my risk to 95 per trade)

[@spiritualwoods4677]

Disciplined Trader thanks a lot !! You are great 😄

[@bharatbhartikumar8135]

20 losses in a row and still if you keep following your plan. Market bring you back if your plan is followed

[@davidkostanjsek4283]

i risk 5-10% swing trading

[@AshokKumar-kz3by]

How its going risking 5% per trade

[@josephfacada2234]

What if you can risk 20% and still follow your game plan?

[@DisciplinedTraderUK]

Hi Joseph, there isn't a strategy out there that doesn't have some losing trades. Even if you were trading a strategy that had a 90% win rate, you'd soon run into a three trade losing streak and that would decimate your account if risking 20% on each trade. Not only that, your emotions would likely be all over the place making it very difficult to stay composed. All in all, I couldn't recommend that you stay away from risking anywhere near that amount more.

[@josephfacada2234]

@@DisciplinedTraderUK The math doesnt add up. If you have a 90% win rate the probability of one loser is 10%. The two is .10 * .10 = .01 then three in a row is .10 * .10 * .10 = .001 or .1%. So roughly 99% chance that wont happen.

[@DisciplinedTraderUK]

But it will eventually. And that's with a theoretical strategy that has a 90% win rate. In reality the win rate would be more like 50-60%. Otherwise your risk to reward ratio is going to be negatively skewed,

[@LewieLeway]

@@josephfacada2234 And by the way, it's 'maths' not 'math'! :-)

[@ritwikghosh8174]

Is 1.50% risk per trade ok???

[@DisciplinedTraderUK]

If you think that works for your strategy then yes

[@martinaasen8440]

Imagine being the unlucky guy with 0% win rate

[@nithinpm5449]

I've been that 10 years before. Lessons learned the hard way, builts a strong foundation . But the passion to not quit is the toughest of all. Thanks 4 taking me back 10 yrs. Cheers👍

[@martinaasen8440]

@@nithinpm5449 cheers mate! I'm happy you stayed! 🎉

[@Kodecco]

@@nithinpm5449 I'm learning Forex Trading right now. Would you mind sharing some insights you've gain from your experiences?

[@iM3j3n]

wait what the heck, what i wanted to do is trade without any balance to start with but always 1 btc per trade, thats what mny friend did as well he has no money but learned to trade so he made 600 bucks in a day and he also traded between 0.1 to 1 btc a trade

[@DisciplinedTraderUK]

How did your friend make money when he didn't have any money to trade with? Unless you mean demo trading

[@iM3j3n]

@@DisciplinedTraderUK he had no money so if he bought 1 btc, he was down -43k in his account technically, then when he sold it (liek 20 times in 1 day) he was up 750 euros and then just transfered the money to his bank account and he had it.

[@stevengaming1837]

Is your friend using the FLASH LOAN ?

[@iM3j3n]

@@stevengaming1837 im Not sure

[@iM3j3n]

@@stevengaming1837 ok i checked what that is and yes he is

[@ryanmorgan775]

Short answer is depends on experiance and win/loss ratio. If your experianced you can risk 5% no worries. If your not dont go past 2% as you probably will blow your account. Even at a 40% win rate you have alot of trades to learn from and fix that ratio.

[@DisciplinedTraderUK]

Hi Ryan, I'd have to disagree. Win ratio isn't determined by how good you are as a trader. You should know what the ball park win ratio of a strategy is before you start live trading an account from the back testing. I also wouldn't recommend risking 5% no matter how experienced the trader is, especially trading a strategy with a 40% win rate. You could very quickly find yourself down 25% and that makes it difficult to keep your emotions in check.

[@ryanmorgan775]

@@DisciplinedTraderUK You miss understood the 40% part. I said no more then 2%. Because you would blow your account fast at 5%. And at least at 2% you have a fair few trades to learn from and fix it to get it above 40% win ratio. I trade part time. I risk 5% with a goal to sell at a 3:1 risk reward. I do good enough. Some days i have bad days some days i have good ones. I see it as i can lose 2 trades, win 1 to break even. On the odd occasion i set it to a 10:1 and get it. I have never blown my account doing this. Prior to this i was stupid. I revenge traded. Still at 5% but id keep going if i lost 3 or 4 trades in a row. Now i stop myself at 3 losses in a row.

[@DisciplinedTraderUK]

Hi Ryan, I don't think you should be trying to fix anything on a live account. As I said earlier, you should know what the win rate of a strategy is before you utilise it. If you don't, you definitely shouldn't be live trading it in my opinion. That said, if you have found an approach that works for you then that's great

[@muni1muni148]

1% consistancy is comfortable

[@DisciplinedTraderUK]

Very 👍

[@mortyjr2334]

10% is not 60% drawdown, you forgot to factor in depreciation. I work at an investment bank and this is the most overlooked thing when it comes to retail traders. This is also why the 1-2% rule is more of an investment thing rather than a trading thing. We have risk managers, they set our percentage (sometimes as high as 8%) and we must stick to it but one thing that I have never been told to do is risk anything less than 3%. Let me break down the math real quick and give the proper numbers: 10,000 account (6 losses 2%) around 10% drawdown 1. 9800 2. 9604 3. 192.08 4. 9411.92 5. 9223.68 6. 9039.21 So again why are you still risking 2%? If you are winning 70% of the time you better up that to 5%

[@DisciplinedTraderUK]

Hi Morty, your point is correct if you are resetting the value of your X% risked per trade after each trade. I personally don't do that, I adjust the amount I risk after a block of trades. So when I have a losing trade on which I risked 2%, I don't then recalculate what 2% would be of my remaining trading capital. I would keep the monetary value the same. If I had a run of losses (say 5 in a row), then I would definitely readjust the monetary value I am risking to represent 1-2% of my remaining trading capital. Normally I just do this once per month though. However, It would have been worth mentioning the method you detailed in the video so I appreciate the comment 👍

[@Deaf-s6l]

1-2% is boloxo … thats trading big accounts .. With small accounts you need to take more risk.. It’s up to you . I wouldn’t bother messing about with a 2k account and risking £20 on each trade You’d die of boredom

[@martinaasen8440]

6 losses with 10% risk is not 60% DD its 43.55%

[@DisciplinedTraderUK]

It depends how you structure it Martin. I don't recalculate my 1% risk after a single loss. I would do it after about 5-7 losing trades in a row

[@martinaasen8440]

No harm, just had to say it because i prefer 10% risk

[@goldenfx5336]

🤗🤗🤗👊👊

[@DisciplinedTraderUK]

👊