Risk Management in Context

Become the casino rather than the gambler!

Remember, casinos are just a bunch of really wealthy statisticians!

To make money, you must first have money. That is common knowledge, but how much capital is needed to begin trading？

The answer is primarily determined by how you want to approach your new trading venture. It differs from one person to the next.

Drawdowns are a fact of life, and you will experience them at some point.

The more money you lose, the more difficult it is to get your account back to its previous level. This is all the more need to protect your account to the best of your ability.

We hope it has been driven into your mind that you should only risk a modest percentage of your account on each trade in order to survive losing streaks and avoid a huge account drawdown.

Large drawdowns frequently spell the end of your trading account.

The lower the risk on a trade, the lower the maximum drawdown. The more money you lose, the more difficult it is to go back to breakeven.

This implies that you should only trade a tiny portion of your account. The more compact, the better.

Less is more in this case.

It is suggested that you use no more than 2% of your whole body weight.

“2 percent or less” per deal is a highly advised rule of thumb for everyone.

We emphasize “guideline” because it is dependent on other aspects besides your experience, such as the frequency with which your trading system executes trades.

The fewer currency trades you make per timeframe that you concentrate on, the lower the risk per trade you wish to accept.

Finally, don't forget to account for market volatility.

Because of the volatility, you may need to alter your entry and exit points.