Alan Solarsh questions the common trading advice to 'risk 1% of your account', pointing out ambiguity about how that 1% is measured (before drawdown, at peak, etc.). He rejects strict percentage-loss rules (e.g., 10% maximum loss) and states his own preference to avoid closing losing trades, favoring hedging and dollar-cost averaging instead.
A lot of people say to me that you should only risk 1% of your account. I don't understand that concept. I don't understand what they mean by risk 1% of your account. Is it 1% before you have drawdown? Is it 1% at the highest peak of the drawdown? Nobody's actually answered that question. So some people say the maximum loss that you should have on a share or commodity or anything that you're trading is 10%. I also don't quite believe in that strategy. As you know, I don't close trades in a loss. I prefer to hedge trade and I prefer to dollar cost average.
Double bottom forming - Gold ready for $4000 #trading #technicalanalysis #xauusd
