Money management

Money management in trading involves specialized techniques combined with your own personal judgment. Failure to adhere to a sound money management program can leave you subject to a deadly “Risk-Of-Ruin” exposure and most probable equity bust.

With this in mind, here are a few essential money management techniques that can make a big difference for your bottom line:

1.Always Use Stops
2.Use A Proven And Tested Methodology For Calculating Stops Rather Than An Arbitrary Figure
3.Use A Proven And Tested Trading System
4.Pay Close Attention To Your “Trade Size” For Each Trade And Be Sure That You Take Into Consideration The “2% Risk Rules”
5.Never Exceed A 2% Risk (Of Your Trading Account Size) On Any Given Trade
6.Never Trade More Than A 2% Risk (Of Your Trading Account Size) In Any Given Sector
7.Never Exceed A 6% Risk (Of Your Trading Account Size) Over-All At Any Given Time
8.Always Trade With “Risk Capital” (Money You Can Afford To Lose)
9.Never Trade With Borrowed Money
10. Use “Scaling” Out Of Positions To Boost Your Percentages
11. In Most Cases, Be Sure Your Trading Account Size Is Not Greater Than 10% Of Your Total Net Worth
12. Develop “The Trader’s Mindset”