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Figure 18-5
Percentage Gain to Recover Percentage Loss |
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The amount of equity to risk will be somewhat dependent upon how risk-averse you are as a trader. It will depend upon the amount of risk that the particular trade or a series of trades is subject to. The amount of equity that can be used on the position size is dependent upon the available equity that can be placed at risk, and is independent of whether a profit or loss has been made. Because of uncontrollable risk, the amount of equity that could be lost is as high as 10 percent; however, it is generally less than 5 percent of the value of the contract. In other words, if you are trading a corn contract that represents 5000 bushels, and corn is currently priced at $2 a bushel, the total value of the corn contract |
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