Risk Management

All competent traders are practical people who quickly calculate risks, results and odds.

• Limit your loss on any trade to 2% of equity in your trading account.

• Never have more than 6% of your total trading account exposed to the market at any one time. This means that you could have three trades risking 6% of your total account at any one time, or six trades risking only 1% each of your total trading account, or multiples thereof.

• Whenever the value of your account dips 6% below its closing value at the end of the month, stop trading for the rest of the month. In other words stop trading as soon as your equity dips 6% where it stood on the last day of the previous month. Close all positions and spend the rest of the month on the sidelines. continue to monitor the markets and undertake a review of yourself and trading systems.

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