Expert Tips: Identifying the Best Time to Raise Risk in Trading

In my early days of trading, I, like many traders, experienced a series of profitable trades that led me to believe I had mastered the game. This false belief tempted me to increase my risk per trade, imagining I could double my earnings. However, I soon realized the importance of being cautious before increasing risk. In this article, I’ll share my insights on why and when you can safely increase your risk per trade.

The Benefits of Not Increasing Risk Prematurely

I discovered that resisting the temptation to increase my risk too early helped me master my emotions in trading. Fear and greed are the two prevalent emotions, and greed often drives traders to risk more in the market. By not increasing my risk, I avoided losing more than I initially expected, ensuring my wins could cover my losses.

Additionally, not raising my risk allowed me to master my trading strategy. Focusing on the process of trading, rather than the money, helped me become a professional trader.

When to Increase Your Risk per Trade

I found three recommended times to safely increase my risk per trade:

  1. After at least six months of live trading: This period allowed me to get acclimatized to my initial dollar risk amount, making it easier to risk higher amounts later on.
  2. When increasing the capital base of my account: It’s important not to increase your capital base too early in your trading career. I also waited at least six months before doing so.
  3. After mastering my trading strategy: Starting with a demo account and then moving to a small live account, I practiced my trading strategy, setups, money management, and risk management for at least six months. Once I understood these facets and felt I had grown as a trader, it was the right time to increase my risk per trade.

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