IYO, what risk per trade, as a percentage of Account Balance, indicates that a signal provider has confidence in his/her signal ? - page 2

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angevoyageur:
Your poll is irrelevant. There is no correlation between confidence and %risk per trade. It depends of the strategy : do you open 1 trade at a time, do you open 10 trades or 100 trades. It would be more relevant to talk about global risk. Even then there is direct link between risk and confidence in the strategy, it depends of the tolerance to risk of each provider.  A provider who likes risk can take heavy risk, and someone more careful will take little risk.
You are quite correct,  my hindsight is 20/20    I should have said total exposure at any one time.  I do feel that the underlying question is still valid though,  risking 0.5% does not show much confidence in a strategy. Conversely risking 10% might be considered foolish . . .  the context has to be considered though.
 
You cant set 10% risk on a trade then wake up to find ten trades open just because you are confident in your system. There should always be reservations.
 
You can set 1% if you know you can have a maximum of 20 trades open resulting in 20% overall.
 
tonny:
You cant set 10% risk on a trade then wake up to find ten trades open just because you are confident in your system. There should always be reservations.
No I wouldn't . . .  in any EA I have coded I control the number of open trades.
 
And what if that controlled number is 20? Thats right you set 1% to have a 20% maximum overall risk.
 
RaptorUK:
You are quite correct,  my hindsight is 20/20    I should have said total exposure at any one time.  I do feel that the underlying question is still valid though,  risking 0.5% does not show much confidence in a strategy. Conversely risking 10% might be considered foolish . . .  the context has to be considered though.

I do't think so, I am currently trying a scalping strategy who opens tens of trades, each one with only 0.1% risk. No relation with confidence, it's risk management. Really I don't see a link between confidence and risk.

10% in one trade is probably bad money management, but as you said, context has to be considered. When I check a signal, I don't care about confidence of the provider, I only see the facts, trying to understand the strategy involved, the global risk taken, if it's real account, if it's consistent...

 
tonny:
And what if that controlled number is 20? Thats right you set 1% to have a 20% maximum overall risk.
Nope,  I can set risk per trade or risk on the account across multiple trades or multiple EAs,  my code can handle both scenarios.
 
In fact a low risk provider is the one who cares for subscribers not just use high risk to build name but endager subscribers. A provider can use big risk but it wont mean you now trust him more because you think he's more confident in the strategy thats how money gets burned to vapour.
 
angevoyageur:
Your poll is irrelevant. There is no correlation between confidence and %risk per trade. It depends of the strategy : do you open 1 trade at a time, do you open 10 trades or 100 trades. It would be more relevant to talk about global risk. Even then there is no direct link between risk and confidence in the strategy, it depends of the tolerance to risk of each provider.  A provider who likes risk can take heavy risk, and someone more careful will take little risk.

I think your remark does have a point, angevoyageur, but you must make a distinction here, I feel :

this poll is about the portayal of a signal provider's confidence in his own signals.  Therefore, you cannot just compare the question with the "normal" question of what a good percentage is for a good MONEY MANAGEMENT.  We are talking about two completely different things here.

In my opinion, of course the risk % in trading should be seen as the TOTAL percentage of open orders.  But here, when talking about how the invested % PER TRADE gives an indication of the signal provider's confidence in his own signals, then I think this is INDEED relevant and a very good indicator of that coder's self-confidence.  We aren't looking to find out how good that coder's money management is, we are looking for an indication of how much WE can rely on his signals !

Just my 2 cents ;-)

 
TheMoneyWizz:

I think your remark does have a point, angevoyageur, but you must make a distinction here, I feel :

this poll is about the portayal of a signal provider's confidence in his own signals.  Therefore, you cannot just compare the question with the "normal" question of what a good percentage is for a good MONEY MANAGEMENT.  We are talking about two completely different things here.

In my opinion, of course the risk % in trading should be seen as the TOTAL percentage of open orders.  But here, when talking about how the invested % PER TRADE gives an indication of the signal provider's confidence in his own signals, then I think this is INDEED relevant and a very good indicator of that coder's self-confidence.  We aren't looking to find out how good that coder's money management is, we are looking for an indication of how much WE can rely on his signals !

Just my 2 cents ;-)

If we make such distinction then maybe we can find a relation. Anyway I was understanding this poll as "can we follow a signal with high %risk per trade as that means the provider is very confident in his strategy".

  • A poll is a very subjective thing.
  • The confidence of the provider is also a subjective thing.
  • Can you find a way to define objectively the relation between risk%trade and confidence of the provider ?

I see a lot of people complaining about losses when following a signal. One of my conclusion is that most person who follow signals don't know enough about risk (see the first answer on this topic). So we can argue indefinitely but this poll isn't relevant for signals subscribers to choose a signal. I advice them rather to "find out how good that coder's money management is".

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