Success in trading depends of many factors but one of the most importants is the ability of each trader to maintain calm during and after a cycle of negative operations. An intelligent handling of Risk help us to keep both confident and motivated even in the middle of a cycle of negative operations.The purpose of this article is to transmit to the reader the importance of working with a correct relation risk/profit to maintain consistence in time.
How much to risk?
Build a strategy of positive mathematic expectation to obtain a high rent ability is important but the main goal of the risk handling is to ensure survival.
A good number of tests by economists of worldwide prestige have proved that the maximum quantity that a trader can risk in an isolated trade without damaging the expectations in a long term is of 2% of the initial capital. That is to say that if you have $ 10.000 in your trading account, you can not risk more than $200 in only one operation.
It is also proved that all the relations risk/profit where the risk is higher than the benefit, can work for some time but in the long run will lead the trading account to bankruptcy.
The following chart is an example of how…