Online Trading
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Money Management & Risk Control
1. Only trade with risk capital and be aware of the risk of losing.
2. Never trade with an underfunded account. Suggested minimum - $5000 US.
3. Never overtrade; adhere to your risk management rules.
a) Never risk more than 5 to 10% of your capital on any one trade.
b) Never risk more than 40% of your capital on all trades combined.
c) Always leave 25% of your capitol as a margin reserve.
4. Use stop loss orders based on technical support and resistance rather than a dollar based stop. Or use options for protection instead of a stop-loss.
5. Define specific risk and profit objectives before trading.
6. Reduce you trading after first loss, never increase; use percentage of capital as guide to size of trades.
7. Avoid the natural tendency toward increasing your trading after a long period of success or a period of profitable trades; use percentage of capitol as guide to size of trades.
8. Never turn a profit into a loss. Raise your stop loss so as to lock in profits.
9. Your risk should be equally distributed. Trade in two or three different commodity products and use a number of trading systems; diversify.
10. Never average a losser.
11. Add to a winner. Increase your risk exposure to the market that is going with you.
12. Never take a loss without ask ‘why?’ Learn from your trading mistakes.. more
