“The biggest risk is not taking any risk” – Mark Zuckerberg
Defining your risk is done through your position size and stop loss placement.
- Size of your position + how far your stop is = risk
Example: (1000 – 2% = 20)
$1,000 account size using 2% risk is $20
- $20 is 2% risk on a $1,000 account
The default risk for NextGen Trinity is a total of 2% per trade but coming from a group of trades (maximum five trades) risking almost 2% together.
So to find the risk per trade we need to divide $20 (the 2% risk per $1,000 trades) by 5 (number of trades in the group).
- We see the risk for each trade needs to be $4 (20/5 = 4)
So for each individual trade per $1,000 traded the risk is $4 and $20 (2%) for the max of 5 open trades.
- If the stop loss is going to be 10 pips then the position of each is 0.40 ($4 / -10 pips = 0.4)
- If the stop loss is going to be 7 pips then the position of each is 0.57 ($4 / -7 pips = 0.57)
The EA is already set to the correct position sizing for this.
Risk to Reward Ratios
The ideal risk to reward ratio for intraday trading (5 minute time frame) is at least 1:1 and ideally closer to 1:1.3 you are golden. Your win ratio needs to be better than 50%.