If you follow my approach, you will never run out of trading capital, no matter how badly you trade. You open a trading account with a finite amount of capital. With this capital you wish to take risks and make more money. In essence, what you are doing is putting your money into the market, a pool of funds, and acquiring an interest in it.Ask yourself the following question:
How much money are you willing to let the market take away from you before you take your money and put it elsewhere? From my experience in the futures market, the maximum amount that I feel comfortable risking is no more than 2.5 percent of my total trading capital on any one position. The maximum to risk on any one trade is the recommended 10 percent. You must divide your risk capital into equal risk segments of 10 percent or less, preferably a defined percentage of declining equity balance. Then you must push the odds of successful trading to better than 50 percent in your favor. Just to obtain even odds will cause you to lose money in the end.
Related posts:
{ 6 trackbacks }
{ 0 comments… add one now }