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Originally Posted by FerruFx
Even a consistant 5-10% per month is enough to make a living with trading. Then why overleveraging and try to make more. Be patient, disciplined and don't be greedy is the key to success.
FerruFx
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Correct. I developed a system recently that has a high percentage win but the risk/reward ratio is small. After extensive research on what money management to use on this system, it was concluded that I should risk about 70% of my trading balance
per trade. This would give the best results without drawdown being so much that a recovery was impossible.
However, which human could risk 70% on a trade, lose 70%, and act as though nothing happened the next trade. No one. Survival is the priority, profits are secondary. Choose a risk factor of 1-4% per trade, accounting for any gaps etc. The stop loss must be predetermined before entry so that you know how much to leverage. Eg. if the stop loss is 20 pips away, and you want to buy 100,000 then if the stop loss is 40 pips away you should only buy 50,000. Don't worry about the irregularity of profits, the regularity of losses is more important to focus on (meaning if you want to risk 1% per trade, make sure you lose 1% everytime, not 1% sometimes and 5% other times etc.)
I wish everyone the best.