Managing Trading Risk Using the 2% Rule
By Dale Gillham and Janine Cox |
Two critical trading risk management strategies to minimize your losses while maximizing your profits is correct position sizing and money management. This involves setting stop losses and calculating the amount you are willing to risk on each trade before you enter the market, which is essential to managing your risk.
While traders agree it important to set a stop loss, which forms part of your money management rules, it is just as important to keep your position sizing the same when trading stocks or Forex, as this makes calculating your risk easier. If you decide your trading risk is too high, you can adjust either your stop loss or your position size, so that you reduce the potential loss and stay within an acceptable level of risk for each trade.
In tonight’s show, Dale and Janine will discuss how you to manage your risk using the 2% rule when trading stocks and Forex so you profit more.