How to risk 1% if my account

[Jobe2433]

I think I have gotten confused.. I have a 1000 account with 100 leverage what would I purchase to only risk 1% of my account? I know this is probably a stupid question but please someone explain this to me....

 

[Pharaoh]

Ignore leverage and focus on your risk percent.

If you have a $1000 account and want to risk 1%, that's $10.

If you trade full lots, your stoploss would need to be 1 pip. The spread would be more, so you have to reduce trade size.

If minilots (and xxxUSD pairs - gets complicated for other pairs), then a full minilot would give you 10 pips. That's a bit tight unless you are scalping.

For microlots, each micro of xxxUSD pairs is 10 cents. You could trade 1 micro with a 100 pip stoploss, or 5 micros with a 20 pip stoploss.


One note - some brokers will try to spike you out of your stoploss. Some people say that you should trade without a pre-entered SL. Personally, I think that's a bad idea. Better to have a mental stop (and the will to ALWAYS follow it) for your risk percentage, but a hard stop far enough away to avoid stop hunting, but close enough to save your account if you lose connectivity at a bad time. In the example above where you trade 5 micros with a 20 pip stop, you could have a mental stop at 20, but keep a hard stop at 100. Then, if your dog chews through your DSL connection at the wrong moment, a worst case scenario is losing 5% of your account instead of a margin call.

 

[Ricex]

Just to add to Pharaohs reply



I hope this doesn't confuse you more, it looks complicated but if you just keep going over it you'll see it's fairly simple to pick up and use for your own risk assessment.

 

[Jobe2433]

Thank you

Thank you guys for the help! I was getting confused. I changed my micro account which trades .05 to a retail account which trades .10 I was thinking these valvues had something to do with my risk percentages...
Thanks again!

Ignore leverage and focus on your risk percent.

If you have a $1000 account and want to risk 1%, that's $10.

If you trade full lots, your stoploss would need to be 1 pip. The spread would be more, so you have to reduce trade size.

If minilots (and xxxUSD pairs - gets complicated for other pairs), then a full minilot would give you 10 pips. That's a bit tight unless you are scalping.

For microlots, each micro of xxxUSD pairs is 10 cents. You could trade 1 micro with a 100 pip stoploss, or 5 micros with a 20 pip stoploss.


One note - some brokers will try to spike you out of your stoploss. Some people say that you should trade without a pre-entered SL. Personally, I think that's a bad idea. Better to have a mental stop (and the will to ALWAYS follow it) for your risk percentage, but a hard stop far enough away to avoid stop hunting, but close enough to save your account if you lose connectivity at a bad time. In the example above where you trade 5 micros with a 20 pip stop, you could have a mental stop at 20, but keep a hard stop at 100. Then, if your dog chews through your DSL connection at the wrong moment, a worst case scenario is losing 5% of your account instead of a margin call.