Never Risk More Than 2% of your Account Balance On A Trade
Hi traders, just thought i should share this information for beginners so they manage their risk and not blow their account too early. You need money to experiment with the markets every day so never set a stop loss that is above 2% of your entire trading account balance.
If you have $100 in your account, your stop loss should be worth $2, implying that this is the amount you will lose if the trade doesnt go in your favor.
I would like to hear from other traders in the house, what do you think about the 2% rule?
I totally agree! Especially if you are a beginner trader this rule is a must follow. Even if you lose a trade, there will always be another trade so the important thing is capital preservation to be able to take advantage of the next trade.
You know how its gonna hurt if after you blow your account, you then see a good trade but dont have the money to take it? Trading is about checks & balances without which one cannot be cnsistently profitable.