Account Growth Strategies: Option 2

Risk X percent of account per trade
This method assumes you will risk a certain percentage of your account on each trade.

First, decide on the percentage of your account you want to risk on each trade. A conservative approach would be 1 or 2 percent, a moderate approach would be 3 to 5 percent, and an aggressive approach would be anything above 5 percent.

Next, multiply your total account by your chosen percentage. Let’s assume you are willing to risk 3 percent of your account per trade and you have a $10,000 account. 3 percent of $10,000 is $300, so your risk per trade will be $300. If your account were $50,000 your risk per trade would be $1500, and so forth.

Now, multiply your stop loss in ticks by tick value. If you’re trading the ES and you’re risking 8 ticks per trade, that’s a risk of $100 per contract. In other words, each tick in the ES is worth $12.50. If you use an 8 tick stop, that’s $12.50 x 8 = $100.

Finally, divide your dollar risk per trade by your tick risk and that gives you the number of contracts to trade.