tag:blogger.com,1999:blog-26012405.post9027873828795883010..comments2024-03-10T12:27:40.157+00:00Comments on the trend follower: A tale of two traders and riskUnknownnoreply@blogger.comBlogger5125tag:blogger.com,1999:blog-26012405.post-680121199570523742015-02-08T22:29:30.270+00:002015-02-08T22:29:30.270+00:00This comment has been removed by the author.Trader Stevehttps://www.blogger.com/profile/07875469634283453010noreply@blogger.comtag:blogger.com,1999:blog-26012405.post-25835489050779231472015-02-08T22:29:12.604+00:002015-02-08T22:29:12.604+00:00Each trader will have their own view of what is ag...Each trader will have their own view of what is aggressive or conservative. That said, I agree that portfolio heat needs to be adequately controlled. My turnover of trades is quite high given my aggressive cutting of any losing trades - I basically do not keep losing trades open for more than a day or two, before I get out. Also, I have strict limits on the number of trades that can be held at any time. Some of the ways I seek to control risk are shown on the recent blog post '10 Ways to control risk'.Trader Stevehttps://www.blogger.com/profile/07875469634283453010noreply@blogger.comtag:blogger.com,1999:blog-26012405.post-63810099729039386002015-02-08T21:42:36.656+00:002015-02-08T21:42:36.656+00:00Thanks Steve, that's what I thought you meant,...Thanks Steve, that's what I thought you meant, just wanted clarification. While on that subject, assume a trader has ten open positions with 2% risk on each. Portfolio heat then would be 20% risk. Another flash crash or fat thumb incident and could be a lot worse of course with massive gap downs. That of course brings up the subject of just what is a prudent portfolio heat or risk one should allow for. Maybe a .5% risk per position is more prudent, at least on initial entry with a partial position size, then add to position and bring the stop up. The position size needs to be large enough to be meaningful if it starts a good trend.<br /><br />PeteAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-26012405.post-20289479724499711682015-02-08T20:40:06.785+00:002015-02-08T20:40:06.785+00:00Hi Pete
Thanks for the question. Basically it is ...Hi Pete<br /><br />Thanks for the question. Basically it is the latter - the intended risk per trade is that based on your initial stop being hit so that you suffer a full 1R loss (in the example this would equate to either 2% or 10% of your equity). So, in the event that his stop is hit, Trader A would lose 10% of their equity on that one trade.<br /><br />Most traders risk no more than 1% or 2% of their equity on each trade - certainly the successful ones and/or those who have lasted. As Ed Seykota says, "There are old traders, there are bold traders, but there are very few old, bold traders".Trader Stevehttps://www.blogger.com/profile/07875469634283453010noreply@blogger.comtag:blogger.com,1999:blog-26012405.post-13091185789219280192015-02-08T20:18:30.082+00:002015-02-08T20:18:30.082+00:00By 2% and 10% equity risk per trade/position, do ...By 2% and 10% equity risk per trade/position, do you mean (using the 10% risk) allotting 10% of equity account per position, or having the initial stop placed on each trade/position so that if its hit the trade will have lost 10% of account value?<br /><br />Thanks<br /><br />PeteAnonymousnoreply@blogger.com