How do you calculate best optimal MM risk % per trade?

Discussion in 'Newbie Questions' started by europound, Jun 21, 2015.

  1. europound

    europound Newbie

    I've got 1000 USD and a strategy that makes sense and has a good profit factor.
    But how do I calculate best optimal fixed fraction % for it?
    Clearly if I risk 1% or 2% per each trade, I am not going anywhere and equity is not utilized at its fullest potential...
    on the other hand if I trade let's say risking 90% of equity on each trade, I am playing with fire and about to blow up my account, right?
    So how do you calculate best MM FF% ?
    What do you use for educated guess then?
  2. Enivid

    Enivid Administrator Staff Member

    You base it on the distribution of wins/losses and also on the size of those wins/losses. If you have enough backtesting history of your strategy, you can emulate the trading process using random numbers based on the probabilities and sizes derived from your backtesting history and calculate the maximum safe %.
  3. globalfx

    globalfx Trader

    You don't have to crack your head too much. I will recommend a strategy calculator or a Margin Calculator Precisely. With these calculators you could tell how much of your capital is used when you enter certain number/volume of trades.

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