Controling Risk
Some people say you should not risk any more than 2 percent of your account on any one trade, while others say between 3-4% is max. One thing is for sure, you should be conservative. We feel you should never risk any more than 5 percent of your account on any one trade. We also recommend that you start out small then add on to the trade once you see it is moving in a strong trend. Now let me clarify why I say 5 percent. Most of the time you should start out around the 1-2 percent range then add-on when the trade goes in the direction of the trend. When the small initial order is profitable then move the stop loss so the trade is at a break even or even a little profitable, this way there will not be a loss on the trade.
Now look for the add on signals. At this time the trade is showing the true trend and it is easier to add on to the trade with greater confidence and trading 5 percent of the account is not an issue. It is possible to trade much more than 5 percent of the account and only have 1 or 2 percent at risk for the rest is protected by your stop losses in a profitable position. Until proper preparation and practice have taken place, do not trade real money.
You should always know where your stop loss is going to be placed before you enter a trade. Once the trade moves in your direction then move the stop loss to a point that is at least break even or where you have a slight profit. Know what your exit signals are and close your positions when the signals are given. Do not try to get more than the market is going to give.
You need to take care of your emotions. If you have a loss and do not know how to handle it then you will become afraid to trade. So set an amount that you can afford to lose both emotionally and financially. Once you have reached that limit then you should do some more simulated trading to sharpen your skill on spotting your entry and exit signals. Once you feel good about that then move on to demo trading. When you are ready to trade live again start out small and grow from there.
You will always need to control financial risk as well as the emotional risk. If either side gets out of control then it could take you out of the market.
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I am planning on opening my account for the first time
your jump start strategy is awesome and it has been working for me
But I have a question
I open a demo account and its balance was 100 000 so i am trading with it. My question is:
Is this account equivalent to an account opened with 10 000 in real live?
asuming a leverage of 100:1?
Please help me i dont want to go wrong at any time
i plan to go free in some time
Juan,
With a mini account you get 1:200 leverage and with a standard account you get 1:100 leverage.
When you open a demo account the dollar value you see is the same as real money. You can change the dollar amount to something closer to the amount of money you would be depositing in your live account. We suggest you open a mini account to start with, then when you are placing trades with 50 mini lots you may consider a standard account.
I know of people that trade mini accounts and have traded them into the hundreds of thousands of dollars. They just put on several trades of 50 mini lots each.
Thank you for letting us know you like the Jump Start Strategy. It is a good introduction to trading. At some point when you are ready you need to learn more about how to become a complete trader. There are several tools that will be made available to the Launch Pad students that will make their trading easier.
Hope this answered your questions.
Jed