2 Percent Risk with 2R Multiple
by Trader Rich
I’ve been emulating my real account trades with my demo account for the January forex trading contest. I’m currently in first place with a return of 11.16%. After today though, my return will drop 2 percentage points to about 9% since I lost 2% on a trade. I don’t know if this will be enough to hold on to the lead.
This is an overview of how I’ve been trading so far in January 2008:
- I have been risking exactly 2% on every trade. No more, no less.
- I’ve been using my forex position size calculator everyday when figuring out my trade size and find it very handy. Some of you have commented the same.
- My R-multiple on every trade has been 2R. For those of you that haven’t heard of R-multiple, it’s really just an abbreviation for reward-to-risk. 2R means my reward-to-risk is 2:1.
- I’m not watching my positions so there isn’t any fancy money management going on. I haven’t once set my stops to breakeven. I’m just letting them ride. If they hit my target, they hit it. If they don’t and stop out, so be it. This is quite different from what I’ve done in the past. In the past, I’ve been quick to set my stops to breakeven when they move a little in my favor. The consequence of doing this was typically a gain/loss of zero. I can’t tell you how many times I’ve moved my stop to breakeven only to see it get stopped out. Then I have to watch as the price goes back in the direction I was trading where it hits my initial target price. This to me was more frustrating than losing. I’d rather stick to my guns on a trade instead of playing it scared.