How much risk of ruin is okay for a trading system?
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Answer:
40% risk.......
Bblegend
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Explanation:
Also, assume each trade can either win or lose, with a 50% chance of a loss, capped at $200. Then for four trades or less, the risk of ruin is zero. For five trades, the risk of ruin is about 3% since all five trades would have to fail for the account to be ruined.
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